Out-of-State
Owning: A Totally Legit (or Not) Guide to Real Estate Roulette or Investing 101?
Cue
the dramatic music, the montage of HGTV flipping disasters, and the obligatory
aerial shot of a McMansion cul-de-sac. Because friends, we're about to dive
headfirst into the thrilling, financially precarious world of out-of-state real
estate investing. Buckle up, buttercup, it's going to be a bumpy ride.
First
things first: let's address the elephant in the Zoom call. Why, oh why, would
anyone in their right mind choose to buy property in a place they can't, like, touch?
Well, there's a siren song of potential profits, that sweet whisper of passive
income clinking in your ear like a desert mirage. Maybe you've seen the TikTok
influencers living large in their Tulum Airbnbs, or your dentist's new vacation
home in the Outer Banks. Suddenly, your shoebox apartment and IKEA futon feel
distinctly un-social influencer.
But
hold your metaphorical horses, aspiring real estate mogul. This ain't HGTV.
Out-of-state investing is like attending a costume party where the dress code
is "financial risk." You could waltz in looking like a savvy investor
in your power suit, only to trip over a hidden pothole of unforeseen expenses and
end up face-planting in a puddle of regret.
So,
before you pack your metaphorical bags and head to Zillowland, let's do a
quick reality check:
- Location, location, location: It's not enough to pick a place with a cute name and a vaguely tropical vibe (looking at you, Branson, Missouri). I was born in Cincinnati but it may not be a good place to buy houses. Research, research, research! Understand the local market, demographics, and economic trends. Is it a tourist trap that will dry up faster than your tears during a Nicholas Sparks movie marathon? Is it an up-and-coming tech hub filled with venture capitalists with itchy trigger fingers on their checkbooks? Knowing your audience is key, even if that audience is a bunch of vacationers with questionable taste in Hawaiian shirts.
- The tyranny of distance: You're not just buying a
property, you're buying a long-distance relationship with leaky faucets,
disgruntled tenants, and rogue squirrels that think your roof is a buffet.
Be prepared to be your own handyman, therapist, and exterminator, all via
the magic of FaceTime (and copious amounts of online tutorials). Because
let's be honest, who you gonna call? Not the Ghostbusters, that's for
sure. They only deal with Class 5 apparitions, not Class 3 plumbing
emergencies.
- The numbers game: Don't let the dollar signs in
your daydreams blind you to the cold, hard reality of spreadsheets. Factor
in property taxes, maintenance costs, vacancy rates, and the potential for
sinkholes (both literal and financial). Remember, cash flow is your friend,
not your overenthusiastic real estate agent promising you the moon on a
stick.
Look,
I'm not saying out-of-state investing is a guaranteed recipe for disaster.
There are success stories out there, people who've built empires from afar, one
rental property at a time. But for every HGTV dream come true, there's a
cautionary tale lurking in the shadows, a cautionary tale that might involve a
mold-infested fixer-upper and a very angry HOA president.
So, the bottom line? Approach out-of-state investing with the skepticism of a seasoned film critic and the cautious optimism of a first-time IKEA furniture assembler. Do your research, understand the risks, and for the love of all that is holy, don't get swept away by the allure of infinity pools and six-figure profits. Remember, real estate is a marathon, not a sprint, and the finish line might just be your sanity. With mortgage rates this high, it is very difficult to cash flow, you
may need a mountain of down payment cash.
I'm a regular question answer(er) on Bigger Pockets.
There are many lies and misrepresentations on B P,
Buyer be Protected.
Now, if you'll excuse me, I have a date with a YouTube tutorial on how to unclog a drain without resorting to nuclear warfare. Wish me luck.
P.S.
If you do decide to take the plunge, please document your journey for the rest
of us. We'll be here, popcorn in hand, ready to laugh, cry, and maybe, just
maybe, learn a thing or two from your brave (or foolhardy) adventures.
Disclaimer:
I am not a financial advisor, and this article should not be taken as financial
advice. Please consult with a qualified professional before making any
investment decisions. Also, I apologize for any emotional distress caused by
the mention of Nicholas Sparks movies. You've been warned.
I have built, rehabilitated, and managed eighty one properties and none were
easy,
