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Out of State Real Estate Investing

How to Make Long-Distance Real Estate Investing Work for Your Investment Strategy

Long distance real estate investing has become a common strategy among real estate investors in areas with high property values, where they either can’t afford to invest in property in their own market or where local rents don’t allow them to earn a high enough return on their investment.

So, what is long distance real estate investing? It’s exactly what the name suggests – investors purchase property outside of their local real estate market. The investment property could be only a few hours away, or it could be on the other side of the country (or the globe!).

iBuyers have made it easier to capitalize on long distance real estate investing. Companies like Roofstock and iBuyer.com opened the door for real estate investors to find and purchase properties across the country regardless of their own location.

Long distance real estate investing could fit many real estate investment strategies such as fix and flip investments where a real estate investor is rehabbing and selling a property, short-term rentals, or multifamily investment strategies. However, because of the time and distance involved, employing a long-term buy-and-hold strategy often makes the most financial sense.

Buying investment property out of state is a great way to minimize risk through diversification and maximize ROIs on income properties thanks to a wider selection of short-term and long-term rental property options in rapidly growing markets where prices are still affordable.

4 Things to Consider Before Getting into Out of State Real Estate Investing

Ideally, all real estate investors would be able to purchase property in a market that’s close to them. But if they live in states where real estate investment opportunities are expensive and hard to come by – like Hawaii, New York, or California – skyrocketing property prices can cut into an investor’s ROI.

With so many hot real estate markets across the United States, investors have the potential to increase profits and expand their real estate investment portfolios even more through purchasing out of state investment properties. Investors gain more opportunities to increase returns by looking outside of their city or state to find their next investment property.

Thinking about buying investment property out of states? Read our list below to get an idea of where to start.

Step 1: Know the Market

The first clear step for any investor who wants to get involved in long distance real estate investing is research. Research the market you’re interested in – especially as it relates to demand for rentals, types of properties available, and rental market trends. You’ll also want to research scalability – can you expand your investment property portfolio in that area?

Additionally, it’s vital to know about property taxes, local schools, average rents, amenities, property history, and zoning laws in the area you are wanting to purchase property. By researching markets you’re interested in and the current rental market, you can get a better understanding of which out of state real estate markets are worth investing in.

Step 2: Decide What Type of Investment Properties You’ll Buy

What type of investment property do you want to purchase?

Long distance real estate investment strategies will differ greatly depending on the type of property you’re interested in securing. Does the area you’re researching have more demand for single-family or multifamily rentals? Is it an up-and-coming market for short-term rentals, and are local laws friendly toward them? Does the market lend itself to profitable fix and flip investing? Or maybe you’re looking for a turnkey rental property already generating solid cash flow.

Regardless of your investment strategy, it’s important to know your specific objectives before you choose the right property and begin looking for private lending companies who offer real estate investor loans to finance your investments.

Step 3: Build a Team of Local Professionals

In most cases, long-distance real estate investing means you won’t be managing your own properties and will instead be outsourcing that job to local professionals. Your team should include a contractor, property manager, and someone who can act as a go-to for your tenants.

It’s also beneficial to find a private lender with knowledge of the area you’re wanting to purchase in. National private mortgage lenders like Lima One are a trusted option due to their large footprint, experience working with long-distance real estate investing, and suite of loans for real estate investors looking to finance out of state investments.

Step 4: Assess: Are You Making Money?

Ultimately, the goal of real estate investing is to make a profit. Long distance real estate investing can help investors reach that goal quickly. Once an investment strategy is in place, it’s a matter of repeating the process whether in the same market or in different ones.

If you’re branching out in the same long-distance market, you’ll already have a property manager, maintenance person, and cleaning company in place. But if you’re moving into another out-of-state market, you'll have the advantage of knowing exactly what vendors you'll need in place to make your investment a success.

How to Profit by Buying Investment Property Out of State

With so many booming real estate markets, it’s easy to see why investors are looking outside of their local market and buying investment property out of state. Obviously, a certain level of difficulty comes with purchasing investment property in an unfamiliar market. That’s one reason having the right hard money lender is crucial.

Lima One Capital is the nation’s premier private lender offering financing and loans for real estate investors. We have a nationwide footprint with offices on both coasts, in South Carolina and in California, and we’re ready to help you with the industry’s best suite of loan options for every real estate investment strategy.

Whether you’re a new investor learning how to build a real estate portfolio or a seasoned investor with a portfolio investment strategy in place and looking to expand  in different states, Lima One is here for you.

Our clients and the real estate investors we work with have different investment strategies, so we have designed a full suite of loan options to allow us to cater to their individualized needs. Contact us today to discuss your next deal, or if you have a deal in hand, accelerate the process by applying now.