When it comes to real estate investment, for most people, investing in their local area is quite often the most ideal scenario for them. But unfortunately, the most worthwhile investment opportunities aren’t often within our local state or region.
Many people don’t realize that just because the local market doesn’t show much opportunity, that doesn’t mean that you shouldn’t consider investing at all.
Provided you have enough knowledge and understanding of real estate investing, investing in real estate that’s outside of your city, or even in another state, can certainly yield potential and be a very worthwhile choice.
If you’re considering out of state real estate investing, here are some tips to help you along the way:
Go Through Many Options
With so many locations and properties out there, finding a good market might seem easy, but deciding on one property over all the rest might seem impossible.
If you can, slowly narrow down your options by adding more parameters or requirements to your choice of both location and property. This can be done on the number of bedrooms, quality/style of property, or the amenities available in the local area such as bars, café, or even schools and parks.
Invest in a Promising Market
When choosing real estate to invest in, it isn’t just about finding a good property, but also about finding a property that within the correct market; you might have the best house town, but if the town has a poor rental or sales market, you’re unlikely to make a profit.
Being open to out-of-state real estate investing gives you access to all the other markets out there. If possible, it’s best to consider places you already know, even if just a little.
If there’s no potential there, then consider looking further afield. Be sure to take your time – it’s better to take longer and find a good market, than rush into it and realize you’ve made a bad decision.
Consult with a Real Estate Agent
Utilizing the knowledge and experience of a real estate agent is a great way of discovering both potential locations and worthwhile properties when considering investing in out-of-state real estate.
This is especially for investors with little experience in this, as they will need the most help and guidance. Estate agents not only know where is good to invest, but can also link you up with local services, builders and home renovators if need be.
Hire Good Contractors
Although one of the main benefits of investing in out-of-state real estate is the range of options available, one of the main drawbacks is finding and hiring reliable contractors to do any work.
Whereas you can check on and meet contractors in your local area, when dealing with a property in another city or state, this isn’t always possible. When hiring contractors that aren’t in your local area, always triple check any details, reviews and referrals before hiring them to do the work.
And if possible, only go with contractors that have been recommended by a real estate agent or a person you know in the area, as these are more likely to be legitimate and trustworthy.
Open a Local Business Account
When investing in a property in a different state, some decide to have an LLC in order to hold their investment properties.
This is a simple process that can be done online if need be, although you will be required to have a designated real estate agent within that state. As for opening a business bank account, this is probably best done within your own state, as it’ll be more convenient.
Before going ahead with this, talk to an agent or attorney to go through the details, just so you understand what it entails and whether or not it’s for you.
Finally deciding on the type of property you would like to invest in is one thing, but coming up with financing backing for such a property is another thing altogether.
Whether it’s through a bank loan, a private loan, a partnership, or any other method – it’s important to check which one suits you best, and which one is going to cost you the least in both interest and any legal fees required.
Some real estate investors say that you should spend just as much time liaising the right loan as you should the right property, as both can be equally important.
Out of state real estate investing can open a world of opportunities to potential investors. It gives you a much bigger range of property types, locations and pricing brackets, but it does have its drawbacks.
Not only does it create issues geographically, but certain law and tax regulations also make things a little more complicated.
Before even considering taking the step, be sure to do your research and understand whether it’s something for you or not. But don’t be put off – there’s definitely potential there!