Is it okay to buy and hold in a different state?

Question

Hi! I posted a question in a different post about how it's more difficult to find a property with a more favorable monthly rent/purchase price ratio in the Triangle Area, NC specially close to the Reasarch Triangle Park (RTP). On average, I'm seeing a ratio of 0.6%.

This got me to thinking about other cities I've lived at or have families in. For example, I have a cousin (and her family) who is very dependable who lives in the Richmond/Sugar Land, TX area. It seems like there, I can buy properties with a monthly rent/purchase price ratio of closer to 1%.

Now even if I bought where I live (Traingle Area, NC), I still plan on using a property manager.

Should I really focus on buying where I live and try to patiently wait for a good deal? Or is it okay to accumulate buy and hold properties in a different state if there is someone who lives there that I can count on? What are the consequences of having properties in a different state?

Ursula B. · Answer

I think it helps to know the area in which you are planning to invest, and to have a really great team set up, especially if you are planning to invest that far away.

I live in GA at the moment, but I still invest in the Winston-Salem area because I use to live there, I know that market, and have great connections.  And since I'm only about 5 hours away, I am usually in the area every 6 weeks or so (sometimes more frequently because I have family there).

Not sure that you have to go out of state to get the ratios you want.  Have you tried the Greenville market? I tried to break into that market this year, but I didn't have the agent connections I needed.  There's a colleague here that may be able to help you in that market (@Matt Redden ) .  I plan to pick up my first property there next year  (I'm an ECU alum). I would offer up the Triad area, but it's highly competitive for the good deals, multiple offers on every potential property.  Even I'm a bit frustrated by the Triad market at the moment!

Best wishes to you in your investing career!

Christopher R. · Answer

Ursula B. - Thank you so much for this. I'm starting to also consider areas outside of the Triangle that are still driving distance. What has your experience been with Winston-Salem as far as cash flow? Please also tell me a little bit more about Greenville. How is it different from the triangle from an investment perspective? Am I able to hit 1-2% there and yet still have low vacancies?

Matt Redden · Answer

Ursula B. Greenville differs from the Triangle in competition. Many of the buyers here are contractors/builders that do side projects or want a rental property here and there. You have very few that do REI full time. As far as investing goes here in Greenville, it's definitely a place to dive into. You have the university as well as the hospital which are the 2 biggest factors that make this city grow. You have the discharged military who find this place and decide to reside here (like myself). My point is that there is a lot of potential here. You can definitely hit between 1-2% for rent and there's always someone who needs a place (nursing students & nurses are some of the best tenants). I can actually send some properties your way so you can take a look my leads. If you ever have any questions feel free to reach out to me.

Webuyhousesredden@gmail.com

Andres Jaramillo · Answer

Hi @Christopher Rayala ,

Houston has a great buy and hold market because we have a lot of jobs opportunities that allow for people to move here which generates a great rental market.

Sugarland is a great area to buy, but sometimes is a hard place to find properties reason is the housing inventory is to new and therefore not much equity and the second reason is that anything that is "distressed" tends to get snatched up by owner occupants who can pay more for properties.

Overall Houston has a strong rental market and it should definitely be something for you to look into.

Hope this helps,

Andres J.

Engelo Rumora · Answer

Hi Christopher,

I recently wrote a blog for Bigger Pockets on a similar topic. Please see below:

http://www.biggerpockets.com/renewsblog/2014/07/26/sight-mind-real-estate-investing-afar/

I suggest you focus less on the stats and demographics of a particular area and more on establishing the right people on ground that will look after your investment.

Thanks for reading and have a great day.

Robert Piller · Answer

I've had a number of houses in several states outside of Texas over the years. I find my best ROI is when I can visit the properties on a consistent basis.  For the extra few thousand dollars a year in "potential extra profits",  it usually gets eaten up in unforeseen costs or poor management.  Without visiting your properties regularly, it sends a signal of indifference to your management company--many of which can smell that a thousand miles away.

Ali Boone · Answer

I have always invested out-of-state from where I live and it's always worked out just fine. There really aren't "consequences" in my opinion. Things work a little different, but nothing drastic.

Bryan H. · Answer

I lived in SE Michigan for most of my life, moved to the Triangle in 2012. I continue to purchase in Michigan because I know the area and have a team in place.

There are many others on BP that live where they want and invest where it makes sense. I do recommend turnkey rentals if you chose to go this route.

It also depends on how involved you want to be. For me, I treat it like a 401k retirement fund. I put the money in, reinvest dividends and plan on using it for retirement. I don't actively manage, I don't want to get caught up in the details. This won't work if you must 'control' the property.

Andrew Syrios · Answer

I personally shy away from investing in other states, although I've heard of it done successfully. If you do, be very careful. There are a good number of shysters who take advantage of out-of-state investors who don't know the market. Vet your team carefully, research the market yourself and stay out of anything that even resembles a war zone.

Derrick Craig · Answer

@Christopher Rayala

I always look to invest close to home.. But if you have dependable people in the areas you are looking at investing in then I would go for it especially if they are family members.

Is it okay to buy and hold in a different state?

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