Where to invest in rental properties?

[Mariana Pasin]

Hello BP's Im new to REI and would like to buy and hold (rent out) properties. Unfortunately, it will be hard to start this business in my area, which is the suburbs of NYC. Since I'm open to invest out-of-state, where should I do it? Any suggestions of cities with good return on rentals? Has anyone that also invest outside their state, could give me any advice in what to look and care for in this case? Thanks a lot!!!

[Heather DeGeorge]

I'm from NE NJ and we have held and managed property out of state (specifically Baltimore).  At the time, we'd already had 2 properties under our belt and the commute was roughly 2-1/2 to 3 hours.  Here are some of the things you need to prepare for:

• If you are completely new, expect to travel--and figure out how traveling last minute would be funded (flyer miles, hotel points, etc.).  At minimum, you will need to travel initially to get the lay of the land: property manager, possibly contractors, get a feel for neighborhoods, etc.
• Absolutely call references for property management companies.  Repeat:  absolutely call references for property management companies.
• Find a local REAL ESTATE attorney and meet with them BEFORE you buy a property.  Pay for that hour.  One of the things we found out the hard way was that we couldn't have an operable fireplace in a rental unit.  Whaaaaaat...?  We happened to BUY a place with an operable fireplace.
• Talk to a local insurance agent and find out the realities that go with insuring a place that might sit empty for any period of time for an out of state landlord.
• Buy a local street map and take notes.  We usually spend a few days driving the local streets and outlining areas that we feel okay about and places we just don't or things that worry us (stream nearby, etc.)
• Subscribe to the local paper (real or online).  Keep up on what's going on to the area so you can evaluate how it might affect your holdings.

The local REIA chapter is a good place to find a lot of this info. They often allow you to attend one member meeting free before joining and you might actually be able to make enough contacts that once to make a difference.

Someone else can better help you navigate finding a landing place to buy.  That's not really my expertise.  We had intended to relocate to Baltimore and found the rental while looking for a primary residence but then wound up being unable to move.  So we weren't intentionally remote landlords.