Investing in real estate can seem like a daunting task. Even for those who have already made a few investments, it is still a big commitment to with every property you buy. Some investors think it is safer or easier to buy locally, or within their home state, but that is not always the case.
These investors may feel like out-of-state real estate purchases will open them up to being scammed. They may worry about being able to reach their property in the event of a storm or disaster. While these can sometimes be valid concerns, they are easily overcome.
Numerous real estate investors will invest outside of their local market. In fact, most successful real estate entrepreneurs are more likely to invest outside of their local market than within it. Investing out of state is imperative for those who truly want to be successful. Let's put your fears at ease and show you why this is a great step to make for your future success.
Larger Profit Potential
A common reason for out-of-state real estate investing is for a larger profit potential or a better increase on your ROI. You may live in an area where real estate prices are sky high and, rather than put all of your money into a local place, you may instead wish to invest somewhere that has lower property values.
The opposite is also true. It's possible that the area you live in has property values that are too low, and you may not see profit potential from renting out in an area that forces you to offer such a low monthly rent. Higher profit margins make it easy to take care of upgrades or repairs, as well as other essentials like hiring a property management group for a (mostly) hands-off experience.
Any and every successful investor or investment group out there knows that you should never put all of your eggs into one basket. Real estate investing offers no exceptions to this rule. Even if you own multiple properties, if they are all located in the same market area then that is still considered having your eggs in one basket.
What happens if a natural disaster strikes? A hurricane could not care less about your multiple properties being spread across a city, or even across the state. Yes, sure, in this hypothetical scenario insurance would probably cover everything. It would still be a major headache having to rebuild and losing that passive income while repairs are made.
What would happen if property values in that area suddenly went down for one reason or another? Real estate is often a safe investment over long term, but short-term rental rates can be fickle. If you have multiple out-of-state or out-of-market properties, then a decrease in value for one area could certainly be made up for with a more diverse portfolio.
Real Estate Should Provide PASSIVE Income
Real estate investing should not be a back-breaking job. Of course there are certain investors who like to get their hands dirty, namely flippers and wholesalers, but everyone else should enjoy the luxury of a hands-off approach. As your portfolio grows and you move on to bigger and better opportunities, the last thing you want on your mind is a tenant calling at 2am for an issue that a property management group could handle..
Out-of-state investing in real estate essentially forces you to take a passive, hands-off approach. If your property is across state lines, you probably aren't going to drive for hours to fix a leaky pipe. The option is simply off the table. And the best part about this is, you can't feel guilty for not dropping everything and driving over there. It simply is not your responsibility anymore.
Property Management Groups Make It Easy
To be truly successful with real-estate investing investing in multiple markets must be done. This is especially true if you genuinely want to earn a livable, passive income. Reedy and Company are experts at Memphis property management and understand the importance of putting your tenants needs first while still having our owners' best interests in mind. Contact us today to learn more about property management in the Memphis area.