Why Out of State Real Estate Investing Is a Good Idea
Out of state real estate investing isn’t as risky as it once was, thanks to advances in technology. We have easier access to more information than ever before. Still, why would an investor choose to invest outside their own country or state?
Sometimes an investor will experience a higher return on investment (ROI) outside their own borders. Out of state real estate investing can also serve to diversify your investment portfolio.
While there are great benefits, out of state real estate investing is not without risks. What are those risks and how can you mitigate them?
The Risks of Long-Distance Real Estate Investing
While out of state real estate investing can be very lucrative, you need to be aware of the potential pitfalls.
Inaccurate Valuations
While you are living out-of-state, you are at a handicap when it comes to understanding your property’s valuation.
For instance, if you’re a Canadian preparing to bid on a tax-defaulted property in Florida, you may have looked your property up on Google Maps (street view) and researched it on Zillow, but the reality is that those images and evaluations aren’t up-to-date.
Natural disasters could have swept the neighborhood. negligent tenants could have severely damaged the property, any number of things could have happened that could devalue your property – or at the very least require upgrades and repairs that you weren’t counting on.
Dependence on Others
Whether its having ‘boots on the ground’ to physically check out the property, or hiring contractors to make repairs or renovations, you are at the mercy of other people’s integrity for reporting on your property’s condition and overseeing its repairs. Unless you have an established network of people or professionals you can trust, then this risk may make out of state real estate investing an unwise choice at this time.
Case Studies in Buying Out of State Real Estate
I’m Ted Thomas and I’ve been involved in real estate since 1970. Starting with condominiums and then growing into single family homes small office buildings and large apartment properties 100 to 300 units in 3 different states Arizona, Nevada and California.
Real estate is usually a slow and steady marketplace where investors make large capital commitments. It doesn’t normally change quickly, it requires patience and longer-term commitment.
The computer and the internet certainly changed the world of investments. Just a few decades ago, people preferred to invest locally in their own state and now with the internet and the ability to research, the complete USA is available and open for investment. Investors from Asia, all of North America and Europeans invest throughout the United States.
In this new world of the internet, new comers are able to make money quickly and a computer allows them liberties that older people just don’t understand.
In just moments, you’ll enjoy learning about my students from foreign countries. They are now able to use the internet and buy bargain properties inside the United States that others pass over. This should be easy for someone in the United States to duplicate. It’s a step by step process. It doesn’t matter what your home state might be.
Kelly from Canada
For example, I’ll discuss my student Kelly. He lives in Canada and has years of experience following real estate gurus that taught him to purchase and rent the properties. That’s a difficult business at best.
He worked every weekend and every holiday after working his full-time job taking care of his real estate portfolio. If he wasn’t fixing broken doors and plumbing, he was cleaning carpet and painting.
He was trained as an engineer and he became a handy man. He owned dozens of properties that translates to dozens of complaints every Monday morning.
He was on a mission. The process of real estate riches was always just over the horizon. The problem is everyone wants to pay less rent and the market goes up and down.
Suddenly, there was a real estate recession. Canadians have a saying “If the United States gets a cold, Canada gets pneumonia.” and that was a tough road for the real estate investors.
Kelly discovered the world of tax lien certificates and tax deeds by attending a work shop. In that workshop, he was surprised about a whole new world.
The world opened up and Kelly had a few bucks. Now he wasn’t restricted to his home town. He could buy in any county in any state in the United States. His money was very convertible.
Kelly followed the rules, followed all the Zoom calls from his coach, knew he didn’t want to be a landlord much longer and at that point, the market collapsed. Imagine how he felt when he had a new business right on the edge and his whole market was collapsing.
Keep in mind, Kelly was a landlord and he was reducing rents OUCH!! He still had utilities, taxes and up keep. I taught him how to buy tax defaulted property at auctions. His first purchase was in California, a residential lot.
He sold it and made $20,000 in 60 days following the steps that he was told. Imagine sitting at your computer at your office, dining room or kitchen and making $20,000. Kelly was sitting in his basement.
$20,000, no travel, no hotel to pay, no lines at the airport, no one sitting next to him with a runny nose. $20,000 using a computer. No tenants. His investment was 1500 miles from his basement office. This is only one deal.
The second deal was close to 1000 miles from home and his net profit was $100,000. How long does it take to make $100,000 renting houses or small apartments?
It doesn’t matter where you live, Baltimore Atlanta, Kansas City, Montreal, Canada, Mexico City. The computer changed the world.
A little closer to home might make you feel good. It just doesn’t matter. There are 5000 tax defaulted auctions per year. Recently, San Diego county advertised over 600 properties for auction and in my 25 years of teaching and guiding tax defaulted investors, I’ve never seen so many properties in such a prime area. These properties are sold with no mortgage. The county needs money. Investors need ROI.
Conclusion
Out of state real estate investing can be an excellent way to maximize your ROI and diversify your investment portfolio. Be aware of the risks, and take steps to mitigate them.
If you would like to get started in out of state real estate investing in tax-defaulted property, then I have a free gift for you, a 1-hour, streaming-video mini course that will teach you the secrets of one of the safest high yielding investments available and how to generate cash flow in real estate.
If you’ve decided it’s time to take charge of your financial future, then this Free Course is the best way to get yourself started on the road to success!
