Out of State investing Tips and Warnings

[Chris Reyes]

Hello Everyone,

My fiance and I have started looking into investing out of state after months of debating of how we are going to expand our real estate portfolio. 

I am from Northern Colorado and our state has enjoyed a huge appreciation in the last 10 years. I personally have had 2 rental properties. The first one I had was bought in 2015 when I was 23 and ended up house hacking the property (had no idea at the time it was called that at the time). The second one I bought as a rental. 

Due to the great appreciation from the first property, I was able to sell it making a good profit without having to pay capital gains because of being sold within the 3 years of living in the property. And I have spent the last year investing into my knowledge of investing and building businesses. 

Since Colorado is still floating in the higher price ranges, we would like to go to other states that offer an opportunity to buy cash or bigger down payments when financing. I was hoping other seasoned OOS investors can shed light and or tips/warnings on what to look for in investing into OOS. 

Some questions I have include:

How do you screen real estate agents in other states?

Do you use the 1% rule in evaluating whether to buy the property, or do you use a higher minimum percent?

Do you prefer to use financing in the other state and use a bigger down payment, so you could save cash reserves for more real estate deals?

If I choose to buy a house cash, is it still advisable to use a real estate agent?

Any comments on this subject will be greatly appreciated in determining our first steps into investing into out of state. Thank you all for your time in advance!

[Chris Reyes]

Originally posted by @Lee Ripma:

@Chris Reyes

I think you’ll find a lot of answers to your questions by looking through past forums, reading the blog, and listening to the podcast. I would personally always use an agent in a new market, but it’s up to you. How did you find your agent in CO? How did you find your dentist? You’re going to need to put in some work to research markets that meet your goals and then find quality professionals to work with in those markets.

 Thank you for this advice! I agree that education is the best form of offence and defence when it comes to any type of investing. I started to listen to podcasts on David Greene since it seems he has great insight to OOS investing. 

And I have also been studying the demographics of Ohio to determine the cities, but the best way I am going to find the real scoop on the market is establishing a team that is more familiar with the areas.