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Pros and Cons of Buying Out-of-State Rental Property

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If you are looking for an investment property to expand your rental property portfolio, you don’t have to limit yourself to your locality. You can diversify your portfolio by finding a place away from your city or even outside of your state. Buying an out-of-state rental property can be a profitable investment strategy if you play your cards right.

Of course, investing in an out-of-state rental property comes with its pros and cons, just as with any other strategy. Before you pursue rental property outside of your city, it is important to know the advantages and disadvantages of an out-of-state investment so you can go in prepared.


Affordable investment properties.

If real estate prices are high in your city it would be a smart move to invest elsewhere. You might be able to find a better deal in the next state, or even just a few cities away. A more affordable property, in another state could make growing your portfolio easier.

More profitable market.

Aside from affordable prices, other cities may also offer greater profitability. You may find your rental property increasing in market value if you invest in an area with strong job and population growth and low unemployment rates.

A diverse portfolio.

If you have already invested in other rental properties, buying out of state can diversify your existing portfolio. This investment strategy can reduce your investment risks. Factors that affect the market and your investment differ in every area. Having properties in different cities can minimize your losses in case something untoward happens in one city. It’s a case of not putting all your eggs in one basket.



The most obvious disadvantage of investing in an out-of-state rental property is the distance. If you manage your other properties yourself, you may need to step down from this one and allow a property management team to take care of your rental and handle the day-to-day tasks.

Greater expenses.

The need to hire a property management team means more expenses. , Even if you have someone else taking care of your property, you will still need to travel occasionally to check that everything is going as reported. And should any significant problem occur, you may need to make an unexpected trip to take care of the problem yourself.

Varying state laws.

Every state has its own landlord-tenant laws. Local laws can also vary from city to city and county to county. No matter how well versed you are in your city’s local landlord-tenant laws, you could run into problems if you do not first familiarize yourself with the laws of your out-of-state rental property’s area. Make sure to do your research or consult a lawyer knowledgeable in real estate before pursuing a property outside of your hometown.

Out-of-State Investment Tips

Despite the drawbacks of an out-of-state rental property, it is still a worthy investment to pursue if you go in prepared. Here are some tips to keep in mind before you get started.

Find a local real estate agent to work with.

A good real estate agent can help you find the right property to invest in as well as familiarize you with the local market. Their insights will be invaluable when it’s time for you to make decisions. They can also help you build connections with local vendors and property managers.

Don’t buy property without seeing it and getting it inspected first.

Buying property without seeing it can cause a multitude of problems. It is not enough to rely on whatever information is available online. Make the trip to check the property yourself and hire a professional to conduct a thorough inspection.

Hire a property management team to handle the day-to-day tasks.

Because of the distance, it would be next to impossible to efficiently manage your out-of-state property yourself. Find a reliable property management team to take care of your business. Aside from handling day-to-day tasks and emergencies, their knowledge of the local market and landlord-tenant laws will ensure that your rental stays on track.

Get your mortgage pre-approved.

It is best to get started on your loan application early since buying out of state will require considerable paperwork. You can start scouting for a lender during your early visits to give you time to learn the local rates and mortgage types and decide on a lender. If you get your mortgage pre-approved, your transaction can move along more quickly.

If you’re looking to invest in out-of-state rental property in Texas, the experienced agents of Berkshire Hathaway HomeServices Caliber Realty can help you in your venture. Their skills and insights will see you through the process of buying a house without a hitch. Contact them at 979.694.8844 or send an email to sales(at)bhhscaliber(dotted)com.

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