Out-of-State Investing: 4 Best Ways to Choose a Market

If you are seriously considering out-of-state investing, you will want to choose the best market for you and then find properties there that will bring you good returns. Here are four tips for choosing a market for out-of-state real estate investing.

1.Determine Your Goals

Would you rather flip houses or purchase rental properties? A good market for buying a rental property will not be the same as a flipping market, and the reverse holds true too. You, therefore, will want to investigate which location is a good market for your goal.

2.Landlord-Friendly State

Some US states favor landlords while other states are tenant-friendly. Choose to invest in a landlord friendly state. The reason is that if you have a negligent tenant, you will have the law in your favor when you act to remove the tenant. The process will be smoother for you than if your property is in a tenant-friendly state.

In a landlord friendly state, the laws will enable you to have the tenant out as soon as possible, which helps save you the financial costs and aggravation associated with having a bad tenant for several months.

3.Ratios of Price to Rent

Analyze the price-to-rent ratios in a particular market. Look at the annual rental costs of the property as compared to the total cost of it if you buy the rental property.

For example, let’s say one house costs $70,000 in one state and rents for $1,000 per month. It is going to be a better out-of-state investment than a comparable home in another state that costs $200,000 and rents for $1,200 per month.

4.Population Trends

Look for a market with a rising population. If the population is booming, you’ll want to invest in that location. If the number of people living there is decreasing, avoid out-of-state investing there.

Tracking the population trends will help you to predict which neighborhoods will be successful in the future and those which are doomed to fail in the short term. Over the last few years, the markets with the fastest, strongest population growth have been the hottest ones in the country.

Use these four tips to determine which market is right for you for investing out of state. If you don’t want to do the research yourself, you can always piggyback off the findings published online by a reputable investor. Just be sure that person is well-known for having investment successes before you take them at their words.