Out of state investing - What's stopping you?

[Nathan Hillier]

Hey guys, 

I wanted to start a thread and ask why more investors are not virtually investing out of state? As a Canadian, I've been forced to invest out of country to seek returns that i cannot dream to find here in Canada. After overcoming the huge obstacle that cross border investing has in terms of being double taxed, I've had a great experience virtually investing in US real estate. 

So what's stopping you from investing out of state and putting your money to work in markets that offer better returns? What are your biggest obstacles that stand in your way?

[Mike D'Arrigo]

@Nathan Hillier For most people it's fear and having it drilled in to their heads that they should only invest in their local market. That's fine when you're local market meets your objective but if your goal is cash flow and you live in CA, it doesn't work. The reality is that most of the risks of OOS investing are the same as in your local market. You can get bad tenants in any market. Things break o houses anywhere. The two biggest challenges that are unique to OOS investing are 1. Knowing the neighborhoods, and 2. Managing make readies at tenant turn over. The first challeng can be overcome by spending some time in the market and learning the areas. Define your criteria and identify the neighborhoods that fit that criteria. Get to understand prices ad rents and focus on the areas that fit the class of properties that you're comfortable. Tenant turn overs can be a challenge and their is the risk of being ripped off by a PM for making the property rent ready again. Not being there to see it personally, you'll have a hard time knowing exactly what needs to be done. Some PM's want to make the property like brand new which isn't practical on an $800 rental, so you have to work with a PM that you can not only fully trust but have similar views on what the standards should be for a rental. Technology makes this much easier today. Until you know your PM well enough that you can have complete faith in them, you can ask for them to Face Time with you as they walk through the property and point out everything that they are recommending be done. 10 or 15 years ago it would have been a lot hard to invest OOS but with today's technology and information that is available to you, it's not so hard. We have worked with a lot of OOS investors to help educate them on how to do it. I'm happy to talk to you and share some insights if you want to reach out or DM me with questions.