successful RE investors told me to not invest out of state

[Roee Hazut]

Recently I had the opportunity to speak with two investors, they are both in their 60’s and both of them have managed to create a great financial freedom for themselves and their families. I was really happy to have this moment to learn from them and to educate my self.

Because the market here is at the top of the k wave it doesn't make sense for me to buy my first real estate investment here (BRRR), so I asked both of them what they thought about investing in other states, in markets with lots of opportunity right now. The answer from both of them was

"I never invest out of state,” and one of them even told me that "it’s a really bad idea.” That was very discouraging for me because in my eyes they are both very successful and they have created exactly what my vision is, as far as the real estate. Because of this it was strong for me to hear that while I’m creating new relationships in other markets in other states and looking for my first deal.

l already read the book "Long Distance Real Estate Investing" by David M. Green (really important one). At the beginning of the book he explains exactly this about the older generation, that some them have a “paradigm" of not investing out of state.

Of course there is a risk in every investment and there are a few additional parts in the puzzle of long distance investing that need to be mastered in order to lower the risk.

I would love to hear your opinions and experiences with investing in other states. If this is my first deal is the consideration different when thinking about investing out of state?

Do you also prefer to invest only in your local market like many people or do you work wherever the opportunity is?

Thank you in advance!

Roee

[Russell Brazil]

I am a successful real estate investor. I in fact also invest out of state as well in my local market.  I advise people NOT to invest out of state, at least until they have a sizeable portfolio and net worth.

When I was on the BP Pod, they asked me what I thought the greatest thing in the way of investors was, and I said an inability to properly assess risk.  Those drawn to out of state investing, fall squarely in this category. They underestimate the risks in doing so, both because of the logistics of the distance, but also because they misprice the risk in the market and asset they are buying.  David Greene makes it sound very easy....but keep in mind, David Green is a multimillionaire who is a full time real estate professional who is not only able to take on that extra risk with limited consequence to him because of his net worth, but because of his profession, he is an expert, without even really realizing it, at mitigating risks in real estate investment.