Investing in real estate can be one of the most powerful ways to build wealth, but what if the best deals aren’t in your local market? Out-of-state real estate investing opens up opportunities in more affordable or faster-growing markets, but it also comes with unique challenges. Whether you're looking to diversify your portfolio or escape sky-high property prices at home, here’s how to confidently invest in real estate from afar.
Define Your Investment Criteria
Before you start browsing properties, get clear on what you're looking for. Ask yourself:
Are you investing for cash flow, appreciation, or both?
What kind of property do you want, single-family, multifamily, short-term rental?
What’s your budget and preferred return?
Having a well-defined strategy will help you focus your search and avoid costly mistakes.
Choose the Right Market
Not all cities are created equal. The right market should match your goals and offer:
Job and population growth
Affordable property prices
Strong rental demand
Landlord-friendly laws
Use tools like Roofstock, BiggerPockets Market Finder, or local economic development websites to compare markets. Look for trends, not just headlines.
Build a Local Team
You won’t be there to manage the property yourself, so building a reliable local team is essential. At minimum, you’ll need:
A local real estate agent or investor-friendly broker
A property manager
A contractor or handyman
A home inspector
A lender (who can work with out-of-state investors)
Interview multiple professionals, ask for references, and don’t be afraid to fire and replace someone who doesn’t meet your standards.
Analyze Deals Thoroughly
Numbers don’t lie. Run each potential investment through a deal calculator and make sure it aligns with your target return. Don’t forget to factor in:
Property management fees
Maintenance reserves
Insurance and taxes
Vacancy rates
A deal that looks great on Zillow can quickly fall apart with just a few miscalculations.
Visit (If You Can)
While not mandatory, visiting your target market, even for a weekend, can be a game-changer. You’ll gain firsthand insight into neighborhoods, meet your team in person, and spot red flags that pictures won’t show.
If you can’t visit, rely on detailed video walkthroughs and Google Street View, and consider working with a trusted boots-on-the-ground partner.
Finance the Right Way
Getting a mortgage for out-of-state real estate is similar to local financing, but be sure your lender understands the market and your investment goals. Some investors also use:
DSCR (Debt Service Coverage Ratio) loans
HELOCs or cash-out refinances from local properties
Private or hard money loans
Compare options to find what makes the most financial sense.
Close and Manage Remotely
Once the deal is done, your property manager becomes your best friend. Make sure they:
Communicate regularly
Provide monthly reports
Handle maintenance requests
Screen and manage tenants properly
Technology is your ally here, use platforms like AppFolio, Buildium, or Hemlane to stay in control from a distance.
Review and Optimize
Out-of-state investing isn’t “set it and forget it.” Regularly review:
Rent rolls and cash flow
Property condition
Market trends
Look for ways to increase rent, reduce expenses, or even scale your portfolio with another property in the same market.
Final Thoughts
Investing in out-of-state real estate might seem daunting at first, but with the right preparation and team, it’s entirely doable, and often more profitable than staying local. The key is treating it like a business: do your research, build systems, and don’t rush.
You don’t need to live next door to your investment to make it work. With the right approach, your next great deal might be hundreds (or even thousands) of miles away.