Unlocking Wealth: Pros and Cons in Out-of-State Investing!

[Min Zhang]

Investing in out-of-state real estate can be a great opportunity, but it comes with its own set of advantages and disadvantages. Here are some pros and cons of investing out of state, based on my experience as an investor-friendly agent from Ohio.

Pros:

1. Diversification: Investing out of state allows you to diversify your real estate portfolio, opening doors to various opportunities in different markets with varying levels of risk and return. Spreading your investments geographically can help mitigate risk.
2. Find Better Deals: Some out-of-state markets may offer tailored deals that yield higher returns and potential for property appreciation, aligning with your preferences.
3. Market Selection: You have the flexibility to choose from a wide range of markets that align with your investment goals, whether that's cash flow, long-term appreciation, or a combination of both.
4. Leverage Local Expertise: You can tap into the knowledge of local real estate professionals, such as real estate agents, property managers, and contractors, who have insights into local market dynamics. This freedom allows you to work virtually anywhere.
5. Tax Benefits: Depending on your home state and the state where you invest, you may benefit from tax advantages, such as lower property taxes or tax incentives for real estate investors.
6. Portfolio Growth: Investing out of state allows you to expand your real estate portfolio, potentially increasing your overall income and wealth.

Cons:

1. Lack of Local Knowledge: Being unfamiliar with the local market and regulations can pose risks. Decisions made based on incomplete information may lead to costly mistakes.

2. Market Volatility: Out-of-state markets may be subject to different economic cycles and market trends than your local area, making it important to understand and adapt to these fluctuations.

3. Increased Risk: Investing out of state carries additional risks, such as unforeseen market changes, regional economic downturns, and natural disasters, which can be more challenging to manage from a distance.

4. Legal and Regulatory Differences: Real estate laws and regulations vary from state to state. It's essential to familiarize yourself with the legal requirements and potential challenges specific to the state you're investing in.

From my experience working with hundreds of out-of-state investors from states like California, Washington, Massachusetts, New York, Texas, Arizona, and many more. They have all been very successful with their real estate purchases. Whether they are looking for turnkey or value-added deals, opening themselves up to other markets provides more opportunities to meet industry professionals and access better deals, both on and off the market. I have consistently found deals for my clients that make sense to them, and they have been consistently buying in markets like Columbus, Cleveland, Dayton, and Cincinnati. Understanding and analyzing markets and deals require extensive research.

Feel free to leave me a comment.

[Robert Ellis]

In columbus as well, based on what you are saying here I think even within columbus or really central ohio affordable housing for investment is there but you have to really define the markets you are investing in. 

What's driving employment? Average house cost? Average rental cost? Talk to property managers for realistic rental expectations. Appreciation rate. Most areas are appreciating in columbus because of the lack of affordable housing but I think something that has to be said is personally for 1% rule properties, I think bedroom communities like lancaster, Newark, Marion, Springfield, etc are better than 1% in urban columbus. Not sure what you are seeing but please let me know your thoughts. Most of the projects we are remodeling I think investors prefer BRRRR which cash flow properties are tougher so I see owners taking a haircut for the faster appreciating urban core.