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Out of State/Region Rental Property

  1. #1
    Member Crconnor18's Avatar
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    Out of State/Region Rental Property


    Iíve been looking to sink my teeth into some investment property(or properties). The market around here is very cut throat and a lot of waived inspection, 100k over asking, same day cash sales are going on around here. Thatís got me thinking of some out of region rentals while I build up more equity/capital to buy more within this area.

    Has anyone dealt with buying rental properties outside of their current region? For instance, living in Boston but owning an investment property in a city greater than 6 hours via car?

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  2. #2
    Soul Rider Paul_E_D's Avatar
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    Re: Out of State/Region Rental Property

    No, but my property is 50 minutes away, and It's borderline. I do hire a caretaker who can respond to small issues. But rental turnover is a lot of trips back and forth. Much further and I think I would need to hire a management company, and there's not much profit in it at that point.

    Unless you are looking at a short term buy/sell model?

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  3. #3
    Lifer obsolete's Avatar
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    Re: Out of State/Region Rental Property

    We have one 2.5 hours away but only short term it as we use it as well. We have someone clean it and we take care of the other BS. I have a long term rental as well but I'm even thinking about subing out some of the maintenance and that's close. You'll definitely need to have the numbers on the buy make it worth it. Your expenses will be a bit higher. I'd say if you're just on the open market with the rest of us scrubs you'll be pretty razor thin. I'm very risk averse so I won't get into something I can't take care of myself with a few hours driving. YMMV

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  4. #4
    Angry Gumball RandyO's Avatar
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    Re: Out of State/Region Rental Property

    my former bookkeeper purchased several weeks of time share in a few units in Las Vagas, she has no problems renting and trips to Las Vegas are now a business expense. Because it's a time share, she isn't responsible for maintenance

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  5. #5
    Lifer
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    Re: Out of State/Region Rental Property

    As someone who has played the game for a long time in various places I would advise you to get a property manager to handle anything further than walking distance from you.
    My next piece of advice would be to check whatever area you will be trying to rent it out in for the landlord/tenants laws that will effect you.
    My third piece of advice is that covid has changed everything and not for the better. Imagine yourself getting a property to rent out and having another eviction ban come into play because of some outbreak. Can you pay that mortgage yourself for an extended period of time while the tenant lives like a king?

    I just sold my last rental property and I can honestly say I will never do it again. Covid messed it up for everyone. You can't even evict on a single court appearance now in most cases, got to to mediation first on your dime. It's favored far to heavily to tenants in the state of mass. NY is nearly as bad. If I was given a house today to rent out I would immediately hire a good property manager and never set foot in the house or deal with the tenants directly. You might get lucky with a good tenant but one bad one can put you upside down for years, if not longer.

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  6. #6
    Fast is contagious JettaJayGLS's Avatar
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    Re: Out of State/Region Rental Property

    I tried to do this across the country and I did not enjoy it.
    The cash flow just isn't worth it to me, nor is the equity build.
    I think its a "grass is always greener" type of thing. It seems really attractive from the outside. Once you're doing it, meh.
    It is a good way to build wealth and dodge some taxes, but outside of making it your full time job, it just doesn't seem worth it to me.
    Property manager will eat up profits. Repairs will eat up profits. Interest is the biggest thing that eats up profits - but more so, it eats up your ability to invest in other wealth building endeavors.
    And right now...I dunno if I would throw a bunch of money in the real estate market. I have been poking around a few different markets and following, and the only thing that doesn't seem to be inflated is multi-family in major city - I assume because the value to these houses is driven by market rents, which are down due to the increased amount of WFH and people fleeing cities. A 2+ family in the city that I can live in seems worth it right now for an investment property - nothing else. I think you will see these snap back once people need to return to work. On the flipside, other areas are at a larger risk of dropping.
    Honestly, unless you have an incredibly strong cash position, it doesn't seem worth it to me.

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    Last edited by JettaJayGLS; 12-30-21 at 08:20 AM.
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  7. #7
    Lifer obsolete's Avatar
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    Re: Out of State/Region Rental Property

    Quote Originally Posted by JettaJayGLS View Post
    I tried to do this across the country and I did not enjoy it.
    The cash flow just isn't worth it to me, nor is the equity build.
    I think its a "grass is always greener" type of thing. It seems really attractive from the outside. Once you're doing it, meh.
    It is a good way to build wealth and dodge some taxes, but outside of making it your full time job, it just doesn't seem worth it to me.
    Property manager will eat up profits. Repairs will eat up profits. Interest is the biggest thing that eats up profits - but more so, it eats up your ability to invest in other wealth building endeavors.
    And right now...I dunno if I would throw a bunch of money in the real estate market. I have been poking around a few different markets and following, and the only thing that doesn't seem to be inflated is multi-family in major city - I assume because the value to these houses is driven by market rents, which are down due to the increased amount of WFH and people fleeing cities. A 2+ family in the city that I can live in seems worth it right now for an investment property - nothing else. I think you will see these snap back once people need to return to work. On the flipside, other areas are at a larger risk of dropping.
    Honestly, unless you have an incredibly strong cash position, it doesn't seem worth it to me.
    What other options would you suggest though? Being able to mortgage the property and only having to break even to build equity seems less of a gamble to me than just putting your down payment into the stock market.

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  8. #8
    Mophead going grey dontpanic's Avatar
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    Re: Out of State/Region Rental Property

    I'm a commercial lending senior underwriter. There's been a lot of very good information posted in this thread so far. Listen to it.

    Renters fled cities for the suburbs 18 months ago. That trend is now reversing with the work-from-home phenomenon, and the window for those buying opportunities has now closed.

    OP, you remarked on the nuttiness in the market in this area. I've got some bad news for you, Sunshine. It's effectively the same all over.

    Personally, I'm a buy-and-hold mutual fund guy. Early, regular contributions have paid off nicely for me in the long term.

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  9. #9
    Angry Gumball RandyO's Avatar
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    Re: Out of State/Region Rental Property

    nuttyness in market

    my PCP recently sold his waterfront home, (on a small pond) for $200k over asking in 6hrs sight unseen, no inspections, closed in 6 days, cash sale, double what he paid 5 years ago, sold his boat, and snowplow truck just as quickly, and moved into a condo 10 minutes from his office

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    RandyO
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  10. #10
    Fast is contagious JettaJayGLS's Avatar
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    Re: Out of State/Region Rental Property

    Quote Originally Posted by obsolete View Post
    What other options would you suggest though? Being able to mortgage the property and only having to break even to build equity seems less of a gamble to me than just putting your down payment into the stock market.
    I’m not anti-property, just stating that long term rentals are not as lucrative and risk-free as some people may think. If you make $1k a month over cost, you need 9 places to make >$100k a year. That can be wiped away fast with a couple poorly timed events. When it comes to cash flow and paying bills…they’re really not great (unless you have an amazing cash position). Good equity builder if you pull it off, but if you can afford 9 homes you probably don’t need the passive income anyway.

    So if you’re only going to own one, instead of purchasing something far away, I would focus on something in a vacation/hot area for short term rentals, something closer to home to avoid the need for a property manager. I think the city is a good buy at the moment, specifically a multi family since rents really drive their value and rents are currently down. I’d say multi family, you live in one unit, and short term rental the other(s) is the most lucrative option.

    If you go outside real estate, your typical stocks/bonds stuff.

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    A man of many names...Jay, Gennaro, Gerry, etc.

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