Should I invest out of state because of very high prices?

[Account Closed]

Hi everyone, when I eventually get ready to invest in real estate I will not be able to start out where I live here in westchester county, New York or anywhere somewhat close (over an hour) to here because of the really high prices. I don't know wether I should go further upstate or even in New Jersey or Connecticut which would be a long drive, or invest out of state so I can get better cash flow for a lower initial purchase price, then eventually I can work my way to invest here(if that would even be worth it). Does anybody from this area or any area in general that is very expensive have any advice for somebody just starting out like me. Please help me out on what to do. Overall, would it even be worth it to invest here even when I have more money down the line? Should I invest out of state? Where should I invest? Thanks for any advice!

[David Faulkner]

There are two possible issues here that I would like to try to untangle, because they are two separate issues with potentially to different solutions:

1)The market you live in is too expensive such that you can't afford to buy anything either now or in the foreseeable future. If this is your problem, then the only ways to solve that is to rearrange your finances such that you earn more, spend less, or both so that you can afford to buy investments near you. If you still can't or don't wish to do this, then as harsh as it may sound I'd argue that you can't really afford to live where you live, and the best course of action may be to move to somewhere more affordable. This advice is actually regardless of if you want to invest in RE or not.

2)You think that because the market is expensive it is not an attractive place to invest and you don't think you can make profit there. I've spent most of my time here on BP arguing that this is 100% FALSE ... you can still make profits investing in RE in expensive markets, and in my last 15 years of experience doing just that it can actually be MORE profitable investing in expensive markets. If this is the issue for you, then I'd advise going to a few REIA meetups near you, seeking out some local investors, and seeing what they are doing locally to succeed. They may beusing different strategies and techniques than what is commonly preached on BP, but I guarantee there are plenty of RE investors all around you making plenty of money consistently. Money can be made in every RE market in the nation, even (and I'd argue especially) in expensive ones, and I'm confident that your market is no exception to this.

Finally, as to venturing out of state as a newbie, I'd definitely advise against it. You do not have the knowledge, experience, or systems in place yet. You do not yet have the capital to scale up. If you go to a far away market to invest, you will give up all of your control and be 100% dependent on strangers to keep your best financial interests at heart and make or break your investment for you. Way too risky IMO.

Good luck!