If you are going to invest out of state, then it doesn't really matter how close or far it is, but rather do the numbers work.

When he stated that the third floor apartment was not rentable I was ready to pack it in and sell it.

If you are interested in the underwriting process and financial model for multifamily, I recently published an article on LinkedIn that breaks down the end-to-end process that we follow to determine the purchase price range for properties.  

I don't do business in NY, therefore I don't know NY law, but in most states that's "Unlicensed Activity" and it's actually a crime.

@Phil Petite what did you purchase contract state about what documents the seller owed you?

Rent by the room to me as a bizz model I dont care for personally. too much work.. now owner occ bring in roomates that different or student housing or as other stated crash pads for airlines thats different. 

I have a tenant in an out of state property which I am self managing.

Also, how does interest taxation work if you live in state X but lend to a syndicating flipper in state Y?

Read a BP article on Puerto Rico.  

I have heard many of the podcasts, read many articles on how to find, fund, and manage deals.