Should You Invest in Out-of-State Investment Properties?
Real estate investing is not easy especially if you decide to invest out-of-state, but is definitely rewarding. You may first think to invest locally in your hometown (which isn’t a bad idea) but investing out-of-state, as well, can actually diversify your real estate investment portfolio and provide options in other locations. If you are determined to only invest in your hometown, you may be missing out on great opportunities elsewhere and if you manage your investments, you may be over-working yourself.
When you invest in out-of-state properties, you can be picky about where you choose to invest. If your hometown’s market is down then there’s a chance your out-of-state markets are doing well. If you know what out-of-state markets produce positive results then you can start building wealth and your portfolio passively with those investment markets.
Do your research on which states are the best to own investment properties. The best way to begin your research is to start with landlord-friendly states, which is the best bet when you purchase out-of-state investment properties. This means you will be in favor of any active or new tenant-landlord laws. According to Roofstock, the top 7 landlord-friendly states are:
Investing in Indiana is a great option as Indiana laws have no tolerance for those who are delinquent in rent. There’s a 10-day notice to pay or move-out if the rent payment isn’t fulfilled. An eviction lawsuit can be placed if the rent amount still isn’t paid within the 10 day period. Of course, during the pandemic, evictions may not be as easy to complete.
Property tax rates, crime rates, median household income, and more should all be considered when researching markets to purchase rental investments, whether it is for short-term or long-term buy and hold. Look for growing rental markets by using industry websites like Zillow, US Census, or National Association of Realtors (NAR). Be sure to find out local laws in the states you are wanting to purchase in case some require you to pay income tax if you own profitable real estate.
Since you are investing out-of-state, this means you will need to find a professional and trustworthy property management company. The property management company will be able to relieve the stress of owning a property in a different location. They should have a broker and possibly a real estate agent who can help with the purchasing process. If they do not have a broker, do not hire them, as this is a legal requirement.
Now keep in mind, not all property management companies are created equal. There are some property managers who do not have a preference if their investors or owners have a hand in every single decision. We, CRM Properties, have owner standards we follow when we sign up potential investors as our clients, which includes but not limited to: our ideal investor treats their portfolio as a business and wants no hand in the property management side. It is best practice to do your research on all property management companies in the market you are purchasing to decide which company is the best fit for you.
Investing out of state is a task not every investor can handle. We have investors who have never seen their properties or met us in person, but still put their trust and money in us to look, purchase, and manage their properties from afar.
If you are looking to purchase in Indianapolis, Kokomo, or Lafayette areas, please reach out to our Sales Agent, Audra at firstname.lastname@example.org or at 317-785-1909.
If you already have properties and you are looking to hire a property manager, contact Chris at email@example.com or call 317-785-1924.
For our frequently asked questions by our current or prospective investors, check out our website below!
Information was knowledge from CRM Properties staff and links below: