Out of State Investing For First Time Investor

[Anthony L.]

I live in Long Island, NY.  This is an expensive area to get started up as a first time Real estate investor as most 2 families and up are in the $400k and up range. My other option is owning a property out of state, but I do not think this is a great idea for a first time investor + the additional cost of a property manager.  Any thoughts or advice appreciated.

[David Faulkner]

 I stand by my previous statements. In order of risk adjusted returns, it is IMO, back tested with historical data and lots of experience:

1. Hands-on local REI (which can include your primary residence, a great place to start)
2. S&P500 & REITs (if you want passive REI exposure)
3. High quality out of state REI (higher price, lower rent-to-price ratios)
4. Low quality out-of-state REI (lower price, higher rent-to-price ratios)

3&4 are HIGHLY dependent of the quality of management in place, a vast majority of PMs suck, and you as a newbie will not necessarily be able to pick out that good PM ... a good PM is a needle in a hay stack thousands of miles away when you don't yet know what a needle looks like nor what a hay stack looks like either (no offense intended, but I think it's the truth).