Would you recommend investing out of state for a beginner?

[Shivam Patel]

Hello BP community! 

I am looking to buy my first rental property. My goal is cashflow. I want to buy a multifamily property, although my local market (Houston, TX)  isn't really known for having a bunch of 2-4plex properties. Not to say i can't find a duplex here, but i'd like to find something with 3-4 units.

Having said that, I know other states have a better abundance of these types of properties that are less expensive. Would you recommend a "rookie" to invest out of state as their first endeavor? I'm hesitant as I am not too familiar with the state's unique laws and I don't have a network in those areas and they'll have to be created from scratch. I'm debating whether it is better to start in state vs out of state.

Would love y'alls thoughts! I'm determined to buy my first property in 2024!

[Michael Dumler]

@Shivam Patel, while it can be debated, most will agree to invest in your backyard before pursuing out-of-state opportunities. 

Have you considered house hacking your first deal? If you do not currently own a primary residence and are renting, all the more reason to pursue this investment strategy. 

If house hacking is not for you, have you considered exploring other Texas markets 3-4 hours from you? I know many investors who solely invest out of state, some of whom have yet to see their properties. That being said, they can do this with peace of mind because they have a resourceful and reliable team in place (agent, contractor, property manager, lender). If you haven't already, read "Long-Distance Real Estate Investing" by David Greene before taking any action investing out of state. 

Best of luck!