Investing In Real Estate Over Long Distance

Should real estate investors consider buying an investment property out of state, or should they only invest where they live? This is a debate that has raged for several years now in regards to investing in real estate. While some think that owning property in another state doesn’t make sense at all, others are convinced that out of state real estate investing is the way to go for a higher return on investment.

The fact is that investing in out of state real estate has its advantages as well as disadvantages. Here are some things to consider before acquiring out of state rental properties:

Pros of Long Distance Real Estate Investing

Freedom to Find More Affordable Real Estate

Real estate in major states such as Massachusetts, California, Pennsylvania, Texas, and New York has become very expensive. Since most investors in such states cannot afford to buy property where they reside, it would make sense to look for long distance real estate investing options in Southern and Midwestern states. Besides being cheaper, such areas are also likely to have lower insurance premiums and property taxes.

Owning a Vacation Home

Long distance real estate investing in a condo, multi family home or single family home means that you can use it as a vacation home when you visit the state. If your dependants attend college in the same state, they may live in the home as well. This will save you lots of money on accommodation fees. You can also rent out this vacation home as an Airbnb short-term rental when you’re not using it. In addition, whenever you visit the state, up to 50% of your traveling costs could be written off your income taxes on the basis that you were inspecting your investment property (be sure to consult a professional!).

Owning a Retirement Home

Some real estate investors buy rental property out of state with the intention of living there one day. For instance, you may be considering living closer to your parents in their later years. You could, therefore, consider purchasing a home and renting it out with long-term or short-term leases. The rent collected will pay off your principal until you are ready to retire.

Cons of Long Distance Real Estate Investing

Lack of Familiarity with the Housing Market

Investing in real estate in your own city or town is comfortable since you are familiar with the housing market- how much property costs, how investment property financing works, what kind of tenants you can get, how much you can make through rent and the amount required for property tax. However, long distance real estate investing is a whole new ball game since you probably don’t know much about the market. As a result, it is very easy to make mistakes, thus wasting your time as well as money.

There are ways around this con of long distance real estate investing. Besides using various tools to conduct a neighborhood analysis, you can get information about the area you are interested in from sites such as Trulia or Zillow. You should also consider hiring a real estate agent that has experience buying and selling property in the area. Once you have selected an agent, make arrangements to visit the neighborhood and look at investment properties together. When searching for rental property, don’t overlook short sales, foreclosures and other distressed homes that can be bought at a much lower price.

Limited Network of Service Providers

If you were to invest in real estate property in your own state, you would probably know who to call for a home inspection, mortgage advice, repairs, and management. Long distance real estate investing usually means having a more limited network of service providers. You can mitigate this by asking your real estate agent to suggest the names of reliable service providers that you can work with in the long term. Be sure to conduct a background check on each of them to find out if they are a good fit.

Too Much Reliance on Others

Another downside of long distance real estate investing is that you will not have much control over the day to day activities at your rental property. You cannot just decide to make a random stopover to check on the property. In addition, you cannot look for tenants, collect rent or even handle repairs when required. This means that you will have to hire a professional property management company to manage the investment property on your behalf. Again, your realtor should come in handy for helping you find an experienced professional property manager in the area. Be sure to check their online reviews to find out what tenants and real estate investors are saying about them.

From hiring property managers to inspecting property, long distance property management is possible. Besides email and telephone communication, make use of tools such as Skype and Whatsapp video to communicate with tenants and property managers.

Challenges in Getting Rent Paid on Time

Late rent payment is a problem that many long distance landlords deal with. The solution to this problem is to have an efficient method of collecting rent. For instance, you could ask tenants to deposit their rent directly into your account at a local bank. Alternatively, they could pay using online platforms such as PayPal. To boost timely payment, you could send them a text reminder or email as the month comes to an end.


The main advantage of long distance real estate investing is that you are free to explore the best places to invest in real estate without geographical restrictions. However, don’t make the mistake of jumping into new housing markets blindly. Be sure to carry out your due diligence to ensure that you get a good deal on long distance real estate investing. To find the best rental properties out of state, you need to carry out a thorough neighborhood analysis to find metrics such as cap rate, listing price, cash on cash return, median prices, average rental income, occupancy rate, and cash flow.

Get good tenants and automate lease renewals and rent payments. Hire a property manager and schedule routine maintenance for your rentals. This will minimize vacancy rates and boost your cash flow.

Housing Market Trends Expected In 2020

The world of real estate investing is always experiencing major shifts. In fact, real estate investment strategies that were once effective can become risky and unprofitable in an instant. In light of this, real estate investors have to be vigilant and up-to-date with every development in the housing market. This article will focus on some of the real estate strategies that we think will still be effective in 2020.

Before delving into the real estate strategies that you should implement, we should first go over the trends that we expect will dominate the US housing market in 2020:

Property prices will continue to increase

Investment property prices have been increasing for the better part of a decade. As a matter of fact, prices have soared past their peak before the recession. Experts predict that prices will continue to rise next year despite a relative cool-off in recent months. The recent CoreLogic Home Price Index Forecast projects a price increase of around 5.4% over the next 12 months.

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Mortgage interest rates are likely to remain at their current levels

The mortgage rate is one of the most important factors in real estate investment. Changes in interest rates determine the type of real estate investing strategies that you could implement. As for 2020, most observers believe that they will stay at their current levels. It’s worth noting that rates have remained relatively low amid a massive wave of refinancing. While nobody is privy to the future monetary policies of the Fed, all signs point toward a light-touch approach on interest rates.

Millennials will be the main driving force in the housing market

Millennials have been driving the real estate market for quite some time now. Recent data from the National Association of Realtors (NAR) has revealed that 37% of all homebuyers in 2018 were Millennials. The reasons for this shift are quite simple. Millennials have simply reached an age where they have enough income to buy a property and are increasingly opting to settle down. As more Millennials reach this age, the trend will continue to gather steam in the next few years.

The disparity between markets will persist 

Different real estate markets are impacted by a wide range of dynamics. For example, certain markets are favorable to buyers whereas others lean toward sellers. This will probably persist for the foreseeable future as conditions will continue to vary from market to market.