Investing In State vs. Out of State (Chicagoland Area)

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Kristen L GarnerBusiness Member

Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes

1y

Hey Sarah!

Starting locally can be a smart move, especially if you already have a realtor, contractors, and contacts in place. That existing team gives you a major head start, especially with a short-term rental or flip. Elmhurst and surrounding suburbs may not be STR "hotspots," but executive rentals or medium-term stays (like traveling nurses or corporate housing) can still cash flow well.

Out-of-state investing can offer different opportunities and higher ROI, but it also adds layers of complexity (property managers, distance, unfamiliar laws), and for a first deal, staying local might let you learn with more control and less stress.

I started my portfolio by investing out of state in Indiana (originally my hometown) . I chose to do so because the area I lived in at the time didn't have numbers that made sense for me and I felt familiar with Indiana and still had connections there. I am very hands off with my properties and let me PMs handle almost everything.

From a lending perspective, I work with both STR and flip investors and there are great loan options available whether you're staying put or going out-of-state (DSCR, non-QM, bridge loans, etc.). Timing bonus depreciation could be worth watching, but the right deal will still perform either way. Your strong W2 income will also help you snatch conventional loan pricing and better rates to get you started - always a plus!

Happy to run numbers if you’d like to compare different strategies or properties. Best of luck.

Tj FlorosPro Member

Real Estate Agent · Chicago · Member since 2025 · 95 posts · 74 votes

1y

Quote from @Sarah Patel:

Hello! I am new to the REI world and my husband and I's goal is to invest in a property by the end of the year and use as a STR. We live in the western suburbs of Chicago and have been weighing the pros and cons of investing in-state vs. out of state. While the current suburb we live in (Elmhurst) seems to be appreciating very well and surrounding comps support list to price ratios of 90% and up, we aren't sure if it's the best market for a STR (perhaps a flip).

While there may be better deals out of state, we worry that out of state investing may be too much for us to handle as our first property. I say this because we have a toddler and have another on the way and both of us work W2s. I work 40hrs/week while my husband works anywhere from 50-90hrs/week. Do people still invest out of state in our situation? Sure! And they have my utmost respect. I'm just not sure how feasible it is for us personally. That doesn't mean we aren't open to investing out of state further down the line. I'm just wondering if investing locally makes any sense. Of note, we would use our realtor who helps us purchase our current home, already have some contractor contacts, repairmen, etc- making our core 4 already in place here. Our ultimate goal (as is anyone else's) is to be able to scale back our time at our W2s and replace that with income from real estate. We know that's not going to come with the first property but want to give ourselves the best opportunity to learn we can.

Bottom line: anyone who has recently invested in the Chicagoland area think that there's still plenty of opportunity here? Or would you argue that the additional challenges that come with out of state investing are worth the potential of a better ROI? We are also hesitant about timing and whether or not to wait and see if the current administration actually restores the TCJA full bonus depreciation provision.

Any feedback/input is welcome. Thanks for reading! Excited to be here and learn.

Hey Sarah!

I'm in the same boat as you, well sort of lol. I just finished up my 2nd house hack which was a BRRRR and getting ready to do it again in 2026 here in Chicago. However, after this 3rd project I think I will be capped out of my DTI and will have to start putting 25% on projects, with that being said like you I want my dollar to go further then what it can here in Chicago. I love investing in Chicago because i think you can get cash flow, post remodel, and a good appreciation depending on the neighborhood you land in. In Chicago its really about making a good deal, its hard to find them on the MLS right now given the current market. I'm thinking about either investing further outside of Chicago or in a different market, IE out of state, all together. Part of me wants to stay 1-3 hours driving distance of Chicago so I can get to a project if need be and having the ability to get somewhat local referrals. Investing out of state I feel like I would need to get an entire team up off the ground and running when like you I have some elements of a team already in place. The only pro I've seen far about investing out of state, maybe lower price point to entry and probably lower property taxes, along with hopefully less pro tenant ordinances.

I really have not looked into what states I would invest in or what kind of capital I would need. I think how much you have to fund the project, down payment, closing cost, holding cost, remodel cost, will definitely direct you into a market that you can afford.

If i were to invest out of state, i would take my time finding a market based on population growth, jobs, housing, etc. After finding a good market I would then just look for a local lender/ agent and find a very small size project with very light remodeling just to get my feet wet, learn the permit process, etc. I would also visit the area multiple times, driving the city/town, meeting the agent & contractor, and then come back to the project mid project and at the very end. After that project hopefully I would make a good amount of connections to scale everything up.

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Bernice RetzloffPro Member

Memphis, TN · Member since 2024 · 234 posts · 100 votes

1y

Hey @Sarah Patel!

Love the thoughtful approach you and your husband are taking! First off, yes, plenty of folks in your exact situation (kids, demanding W2s, limited time) successfully invest out of state—and you absolutely don’t have to do it all yourself. In a market like Memphis, for example, there are full turnkey teams (like ours) that handle everything—from acquisition, renovation, tenant placement, to property management—so you’re not stuck fielding repair calls or scrambling for contractors while juggling your toddler and work life.

That said, you're not wrong for considering something local first, especially since you've already got a strong "core four" in place in Chicagoland. If it's more about learning the process, a local flip or STR could be a great starting point. But if your main goal is long-term cash flow and scaling toward financial freedom, then Memphis might give you better ROI and fewer headaches than a short-term rental in a pricey, high-regulation suburb. Fully renovated homes here often rent quickly to long-term tenants, backed by demand from employers like FedEx, Nike, and the growing Ford Blue Oval project. Plus, properties in B-class areas with A-class renovations can give you that "set-it-and-forget-it" feel that's super valuable for busy families like yours.

If you’re not ready to invest out of state now, that’s totally okay—but don’t write it off either. A turnkey buy-and-hold could be the stepping stone that allows you to keep learning while still moving toward your goals. If you'd like, I can share some examples of what that could look like so you can compare them side-by-side with local options. Either way, you’re asking the right questions, and that’s half the battle!

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Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

1y

@Sarah Patel

You're in a great position to start locally—especially since you already have a trusted agent, contractor network, and familiarity with the area. While out-of-state investing can offer stronger returns, starting close to home (even with a flip or long-term rental instead of an STR) can help you learn the ropes without overextending yourselves—especially with a growing family and demanding work schedules. As your experience grows, you'll be better positioned to explore higher-ROI markets with confidence and systems already in place.

Good luck!

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Min ZhangBusiness Member

Real Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes

1y

Hey Sarah! When it comes to investing locally vs. out of state, I highly recommend starting in your local market, especially since you already have your core team in place (realtor, contractors, repairmen, etc.). It will save you time and reduce some of the stress of managing a property remotely, especially as first-time investors.

One of the reasons why investors look for out-of-state opportunities is when the local numbers just don’t make sense for them. The returns may not be as high or the market doesn’t align with their goals. However, I wouldn’t necessarily discourage looking into out-of-state options if you find that the numbers work better elsewhere. Yes, it can be more challenging to manage a remote property, but many investors successfully do this by building solid relationships with local teams and property managers. If you're open to out-of-state investing down the line, consider starting small, perhaps with a property manager and team you can trust, and always prioritize due diligence. It could still be a great option for scaling your portfolio in the future. Good luck!

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John Clark

Member since 2018 · 1k+ posts · 1k+ votes

1y

Quote from @Sarah Patel:

Hello! I am new to the REI world and my husband and I's goal is to invest in a property by the end of the year and use as a STR. We live in the western suburbs of Chicago and have been weighing the pros and cons of investing in-state vs. out of state. While the current suburb we live in (Elmhurst) seems to be appreciating very well and surrounding comps support list to price ratios of 90% and up, we aren't sure if it's the best market for a STR (perhaps a flip).

While there may be better deals out of state, we worry that out of state investing may be too much for us to handle as our first property. I say this because we have a toddler and have another on the way and both of us work W2s. I work 40hrs/week while my husband works anywhere from 50-90hrs/week. Do people still invest out of state in our situation? Sure! And they have my utmost respect. I'm just not sure how feasible it is for us personally. That doesn't mean we aren't open to investing out of state further down the line. I'm just wondering if investing locally makes any sense. Of note, we would use our realtor who helps us purchase our current home, already have some contractor contacts, repairmen, etc- making our core 4 already in place here. Our ultimate goal (as is anyone else's) is to be able to scale back our time at our W2s and replace that with income from real estate. We know that's not going to come with the first property but want to give ourselves the best opportunity to learn we can.

Bottom line: anyone who has recently invested in the Chicagoland area think that there's still plenty of opportunity here? Or would you argue that the additional challenges that come with out of state investing are worth the potential of a better ROI? We are also hesitant about timing and whether or not to wait and see if the current administration actually restores the TCJA full bonus depreciation provision.

Any feedback/input is welcome. Thanks for reading! Excited to be here and learn.

Don’t know your experience or whether you can move to NW Indiana, but with two children and two regular jobs, I would house hack a duplex. Make sure you like being a landlord. Make your landlording small and simple. Family first.

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Eric FernwoodBusiness Member

Realtor · Las Vegas, NV · Member since 2014 · 997 posts · 1k+ votes

1y

Hello @Sarah Patel,

The goal of real estate investing is financial independence. However, financial independence isn't a single event—it requires a lifelong income that maintains your standard of living. The investment city defines all long-term income characteristics. Below are some investment city requirements for achieving financial independence.

Your rental income must outpace inflation. Every time you shop, the same set of goods and services costs more than before due to inflation. Only if your rental income grows faster than inflation will you have enough money to pay these rising future prices. Rents and prices are driven by demand, which is in turn determined by population changes. Where there is sustained and significant population growth, prices and rents will rise. However, if the population decreases or remains static, prices and rents will decrease or not increase fast enough to enable financial independence.
Your rental income must last throughout your lifetime. This depends on your tenants remaining employed at similar wages. The problem is that companies have an average lifespan of 10 to 18 years. If new companies do not create replacement jobs that pay similar wages and require comparable skills, your rental income will not last.
Existing home prices must increase fast enough so that you can grow your portfolio using accumulated equity, not just cash from savings.
Never invest in an area with rent control. I've had clients who told me that evicting a non-performing tenant can take over one year. Where I live, a typical eviction takes just 17 to 35 days. Additionally, rent control (and related restrictions) may prevent you from choosing the best tenant, limit your ability to increase rents to keep pace with inflation, and dramatically increase operational costs.
Never invest in a high-crime city. Non-government jobs are short-lived. Most companies last only 10 to 18 years. During your lifetime, your tenants will need to find new employment multiple times. Unless new companies establish operations in the city and create replacement jobs with similar wages, the only available jobs are likely to be lower-paying positions in the service sector. When companies search for locations to set up new operations, they rarely consider high-crime cities. Never invest in any city on this list.

Very few cities meet all the requirements for lifelong financial independence.

Remote Investing

In my opinion, remote investing only works if you have an experienced investment team. Without one, you'll waste time and fail to achieve your desired results.

If you want to achieve financial independence, the city is the most important decision. Additionally, I would not invest in any city without finding an experienced local investment team.

Reach out if you have questions.

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Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

1y

I am a realtor in Chicago and have tons of clients buying HERE from out of state lol so probably would not make sense to invest out of state when already in a good cashflowing area. Chicago is one of the few cities where you can buy class A/B 4 units and actually cashflow. Most major cities with strong demand class A/B neighborhoods of the same tier have much lower rent to purchase ratios. 2 units are tough but 3/4 units are great opportunities if your budget allows. You also may be able to do owner occupant loans to get in at 5-10% down vs out of state paying investment rates/dp.

Also make sure to look at cashflow after bringing rents up to market rate. Most of the 2-4's we see have rents a good 20%+ below the prices we get once re-list the rentals. I have a 4 unit in Rogers Park that has been a great investment and the rents have gone up every year.

Jonathan KlemmBusiness Member

Moderator

Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes

1y

Hey @Sarah Patel - Welcome to BiggerPockets and one vote (here) for Chicago investing!

I really like that area of the Western suburbs, you are in Elmhurst, Lombard, Villa Park is a super nice little pocket! Is there a specific reason you want to do an STR?

I've had several short-term rentals, and they can be a TON of work to get set up. In my opinion, and with any real estate strategy, the best thing is to focus on doing the same thing repeatedly so you can learn from your mistakes and put systems in place to help you automate your business.

If you think setting up a short-term rental is a ton of work, out-of-state investing might be even harder! Having the right team is probably the most critical aspect of any business, and being able to meet them face to face regularly is priceless.

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Melissa JusticeBusiness Member

Rental Property Investor · Phoenix, AZ · Member since 2024 · 518 posts · 1k+ votes

1y

Hey @Sarah Patel,

Welcome to the BP community!

First of all—kudos to you both for even thinking long-term and strategically while juggling family and demanding W2 jobs. That mindset puts you ahead of the game. Now, to your question: Is it worth investing out of state if you’re new and busy with life? The short answer is: Yes — if you go turnkey.

Given your situation — full-time work, toddler, another baby on the way — trying to self-manage a short-term rental, especially in a heavily regulated area like Chicagoland, can quickly become overwhelming. That’s where turnkey properties come in. These are fully renovated, professionally managed rentals that are ready to go from day one. You buy it, and the cash flow starts while your life goes on.

How Turnkey Investing Solves Your Concerns -
Hands-off management: You get property management built in — no coordinating repairs or finding tenants.

Remote-friendly: You don’t have to visit the property to manage it. Everything can be handled digitally with regular updates from your team.

Done-for-you team: The “core four” (realtor, contractor, PM, lender) is already in place.

Cash flow from day one: Many turnkey providers focus on cash-flowing markets where returns are stronger than high-cost areas like Chicago.

More scalable: Once you own your first turnkey rental and see it working, you can repeat the process with confidence — even while raising a family.

If you’re thinking of investing out of state, markets like:

South Bend, IN (just a short drive from you)

Memphis, TN

Akron, OH

Locust Grove, GA

These areas are popular among investors for their affordability, stable rental demand, and landlord-friendly laws — and turnkey providers are already active there.

Short-term rentals (STRs) sound exciting, but they require constant attention, reviews, guest communication, pricing adjustments, etc. That’s a part-time job on its own. With turnkeys, you start with long-term tenants, professional management, and passive income — which seems like a better fit for your stage of life.

You're absolutely right to be thinking about tax strategy. If the bonus depreciation changes return under the current administration, it could enhance the upfront tax benefits on new acquisitions — especially on turnkey new construction or rehabbed properties where cost segregation can apply. Let me know if you want to discuss more in depth!

Wishing you much success!

Melissa Justice

Investment Strategist at Rent to Retirement

3 Reply

Jarret Jarvis

Real Estate Agent · Chicago · Member since 2021 · 170 posts · 62 votes

1y

Hey Sarah—welcome and congrats on taking the first steps (and on baby #2!). With your core 4 already in place, investing locally makes a ton of sense—especially for your first deal. Elmhurst and nearby suburbs still offer solid potential, even if STRs are tricky due to local rules. A flip or mid-term rental could be a great way to get started.

Out-of-state can offer better ROI, but it's a steeper learning curve—local is often smoother when juggling W2s and family. Happy to chat anytime if you want to dig into local options! #letsgo - Jarret

Eudith VacioPro Member

Real Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes

1y

Hey @Sarah Patel 👋🏽

That's awesome that you are starting your journey in real estate investing & the #1 reason I was motivated to invest in real estate was mainly for my family to replace my W2 income, and it's been one of the best things I've ever done financially!

Given your situation—raising two toddlers and managing demanding jobs—investing locally in Chicago might be the most practical and time-efficient approach. Opting for a more turnkey property can help minimize the time and effort required for renovations and management.

Being local allows you to personally oversee your investment, respond promptly to any issues, and build relationships with local contractors and property managers. This hands-on approach can be invaluable, especially when your time is limited.

Once you have more flexibility or have established a reliable team, you might consider exploring out-of-state opportunities. I am a HUGE fan of Northwest Indiana (East Chicago, Hammond, Gary). But for now, focusing on local investments can provide a manageable and effective way to build your real estate portfolio, that's how I got started and then made my way into Indiana.

I wish you the best of luck but you're in the right place to get started. HAPPY re-INVESTING!

Jarret Jarvis

Real Estate Agent · Chicago · Member since 2021 · 170 posts · 62 votes

1y

Hey Sarah — welcome to the REI world, and congrats on setting such a clear goal while balancing so much already! 👏

You're asking all the right questions. Investing locally for your first deal definitely makes sense, especially since you already have your core four (realtor, contractor, etc.) in place. That local team support is huge, especially when juggling W2 jobs and a growing family.

While out-of-state can offer better cash flow on paper, it comes with more moving parts and less control—which can be stressful for a first-time investor. Starting local gives you hands-on experience, helps you learn the ropes, and builds your confidence. Plus, suburbs like Elmhurst have strong fundamentals and are great for flipping or long-term appreciation plays.

As for STRs, make sure to double-check local ordinances—some suburbs are cracking down. You might also explore medium-term rentals (30+ day furnished), which are often less regulated but still highly profitable near hospitals, corporate hubs, etc.

Keep learning, stay flexible, and know that the perfect time rarely shows up. You’re already ahead by being thoughtful and intentional.

Are you leaning more toward a flip, STR, or long-term rental as your first move? #letsgo Jarret

Mike FisherBusiness Member

New Lenox, IL · Member since 2024 · 105 posts · 60 votes

1y

Quote from @Sarah Patel:

Hello! I am new to the REI world and my husband and I's goal is to invest in a property by the end of the year and use as a STR. We live in the western suburbs of Chicago and have been weighing the pros and cons of investing in-state vs. out of state. While the current suburb we live in (Elmhurst) seems to be appreciating very well and surrounding comps support list to price ratios of 90% and up, we aren't sure if it's the best market for a STR (perhaps a flip).

While there may be better deals out of state, we worry that out of state investing may be too much for us to handle as our first property. I say this because we have a toddler and have another on the way and both of us work W2s. I work 40hrs/week while my husband works anywhere from 50-90hrs/week. Do people still invest out of state in our situation? Sure! And they have my utmost respect. I'm just not sure how feasible it is for us personally. That doesn't mean we aren't open to investing out of state further down the line. I'm just wondering if investing locally makes any sense. Of note, we would use our realtor who helps us purchase our current home, already have some contractor contacts, repairmen, etc- making our core 4 already in place here. Our ultimate goal (as is anyone else's) is to be able to scale back our time at our W2s and replace that with income from real estate. We know that's not going to come with the first property but want to give ourselves the best opportunity to learn we can.

Bottom line: anyone who has recently invested in the Chicagoland area think that there's still plenty of opportunity here? Or would you argue that the additional challenges that come with out of state investing are worth the potential of a better ROI? We are also hesitant about timing and whether or not to wait and see if the current administration actually restores the TCJA full bonus depreciation provision.

Any feedback/input is welcome. Thanks for reading! Excited to be here and learn.

Hello Sarah,

Thanks for sharing your journey—and congratulations on taking the first steps into real estate investing while balancing so much. Your thoughtful approach already puts you ahead of the game.

Given your current stage of life, I believe starting locally is a strong strategy. You already have key pieces in place—your realtor, contractor contacts, and knowledge of the area—which can make your first investment more manageable and less overwhelming.

There are still good opportunities here in Illinois if you know how to find them and structure the deal correctly. Being local allows you to stay hands-on, which is especially helpful when you're learning and want to maintain control.

Out-of-state investing has its place, but it often makes more sense once you’ve built a solid foundation closer to home. It’s not just about the numbers—it’s about reducing friction, especially when time and energy are limited.

If you're open to it, I'd be happy to jump on a quick call and walk you through what a realistic local investment might look like, including what to expect and how to set yourself up for success.

Let me know if this week or next works for a quick chat.

All the best,

[email protected]

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