Pretty certain those investors saw some viral videos and thought it was easy. If you don't have a solid team in place, you will get burned.

There are plenty of successful OOS investment and operation stories too. The key is a good process and awesome local (on-demand) team. Additionally, an investor friendly State is also key, in my opinion. If you are interested, check out Episode 4-6 in this podcast.

You've got some great points here Tyler! Out of state investing can be challenging on its own and having little to no experience only makes the matter worse. I'd say for those just starting out it is smartest to start in your own backyard. Think about it, you already have a good idea of where the nicer parts of town are and where the not so great places are. You also already have a network of people who can help you find a quality agent, contractor, lender, etc. I'd save investing out of state for when you get more experience and can build up a quality system that will simplify the investing process.

All three of those are REAL problems and can even be real problems in state also. The rental business has many facets. It can be honed to be relative easy to deal with but that's with an upskilled person / team. My advice for anyone entering the market, not only study up, but get yourself a mentor with good experience. This will save you years of learning and mistakes. Investors not having the appropriate skill set, personality, and knowledge and deciding to just jump in - trouble. Managing out of state yourself with no help. How do you do this? Do you fly in for everything that needs management oversight? This may be illegal in some states and you frequently at least need an in-state official representative. Agents leading us astray? I know that that none the amazing agents here will lead someone astray, but this certainly is way more common than I'd like it to be in general.

Interesting to hear! I think a first time investor taking on a bigger rehab than they can handle also happens a lot in state, unfortunately. Getting a good team, and particularly a good PM in place is crucial for OOS investors. Good PM's will find and retain tenants as well as maintaining the homes condition.

I agree. I, as well as other agents on here, do have much better reputations! It also leads to accountability. Reviews on BP for example. This is why I also don't recommend using the property manager as your agent. Their revenue stream is typically from managing the property, not specializing in selling. To make the correct buy, you should operate with a trusted partner (realtor) who specializes in doing just that day in and day out, with high accountability.

Agreed. You have to be in it to learn for the long haul. It can be done but you need to probably visit your OOS area multiple times (IMO).

Updated over 1 year ago, 05/24/2023

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Tyler LinglePoster

Agent

Real Estate Consultant
Indianapolis, IN

General Real Estate Investing

OOS or Local?

Tyler LinglePoster

Agent

Real Estate Consultant
Indianapolis, IN

Posted May 19, 2023 09:43

I'm the listing agent on now 3 current failed OOS investments. In each scenario there were patterns I noticed:

- The investor bit off a large rehab with almost no experience managing rehabs before in their real estate career (sounds smart to do the first one miles away right?)

- The investor managed it themselves from OOS.

- The investor took their Realtor, Lender, Property Manager at face value, and were clearly taken advantage of.

Personally, I would NEVER invest out of state without AMPLE experience investing close to home. The reality is, absolutely nobody will care for your property as much as you will. Having eyes on it (accountability) is huge. Additionally, I think it's always wise to cast your net wise and talk to a few realtors, property managers, etc at the beginning, and earnestly seek feedback, rather than going with the voices that confirm everything you already think. Always ask, "What could I be missing here?"

I'm curious, when do you think (if ever) it's smart to invest Out-of-State?

Tyler Lingle
[email protected]

Roots Realty Co.

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Indianapolis, Indiana

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