Real estate investors often wonder if it’s best to invest where they live, or if they should think outside the box and invest in out of state properties. There are pros and cons to consider, and it really depends on your investment goals.
Out of State Investments: The Pros
One of the benefits of investing out of state is that it gives you a property in another place; potentially somewhere you’d like to live one day. If you live in New York but have dreams of retiring in southern California, buying an investment in Los Angeles is a good idea even though it’s across the country. This way, you have a property ready for when you do retire and until then, tenants will be paying down your mortgage and taking care of your asset.
Out of state properties also give you the benefit of detachment. When you have a professional property manager taking care of your home in another state, you don’t have to worry about it. You won’t be the one getting maintenance calls in the middle of the night and collecting rent every month.
Out of State Investments: The Cons
The biggest negative when it comes to investing out of state is the distance. If something goes wrong at your property or you want to show it to a prospective tenant, you can’t get there very fast. This is why professional property management is so important to out of state investors. You need a local person or company with boots on the ground who can help you manage the home.
Another thing to remember is that laws and regulations are different from state to state. The things you do in your home state will be different than what you’re allowed to do in the state where you have your investment home. You have to do some research and educate yourself on the market.
Out of state investments can be a great way to earn money and plan for the future. Every expert will tell you that diversification is critical to your financial security, and that includes your real estate investments. You don’t necessarily want to keep all your rental homes in one market.
If you’d like to talk about investing in the Los Angeles area, please contact us at EFS Property Management. We’d be happy to tell you more.