There’s a lot of information (and mis-information) out there about whether you should invest in-state or out-of-state with real estate. The fact is, it depends…
It depends on the kind of investment properties you’re looking for. It depends on the model you’re following (are you buying and holding, or fixing and flipping?). For our purposes here, we’ll focus on the core of the RP Capital way ‒ buying and holding single family residences (and maybe duplexes or fourplexes) to rent out. However, what I’m going to say here applies to more than just this approach.
Because here’s the thing: often, folks assume that investing out of state is some “big deal,” like you can only do that after you’ve got more local experience or something. They feel it’s natural… easier… and safer to invest locally.
But that’s not the case at all. It’s approaching everything backwards. Here’s why…
Thinking “In-State” Isn’t Extraordinary…
If you want to succeed as a real estate investor, you’ve got to think in an extraordinary way. You’ve got to think like a millionaire.
And too often, not looking into markets out of state is the result of thinking “normally.” It’s like you’re beginning to be open to a new idea ‒ investing in real estate ‒ but you’re also resisting really letting yourself see what it’s all about. You immediately contain this new idea… inside of old thinking.
And when that happens, it’s not all that different from thinking you’ll just add more consumer debt to your credit card… or refuse to outsource a task that drains your time and energy “because you can’t afford it”… or start reading personal development books “later, when you have the time.” These aren’t the typical thinking patterns and habits of financially successful people.
I’m not saying there aren’t good reasons why you should invest in-state, if it makes sense for your particular circumstances. I am saying you need to start with checking your thinking ‒ if you’re fixated on “in-state” because you’re stuck in old patterns of thinking… you need to re-think your position!
It’s About Getting Out of Your Comfort Zone ‒ Including Geographically
This is similar to thinking extraordinarily about money and investing. The difference here is, I’m looking especially at your emotional comfort zone.
To make big changes in your financial life, you’ll need to do more than think differently about your money, your time, and your goals. You’ll need to feel differently about them.
At the least, you’ll need to be more aware of the subtle ways your feelings can influence and even derail your success… and then find ways to work around the emotional roadblocks. And geography can play into this.
I get it: you know the area where you live. The cities, the regions of your state ‒ you understand the culture, you’ve driven ma
ny of the roads. It’s comfortable to want to invest there.
But comfort can be a success killer. When you’re learning how to invest in real estate, you want to learn new skills, shed old habits, and become a new kind of person
in some very real ways. Refusing to look out of state for investment properties could very well be a way to shield yourself from the liberating dis-comfort of transforming your finances and your life. So be careful with these emotions…
It’s All About Cash Flow ‒ Wherever You Find It
This is the bottom line. The reason you invest in real estate… is to make money. It’s about growing your net worth. It’s about generating cash flow.
Some markets have been very favorable for generating positive cash flows for property owners. Others not at all. When you buy the right kind of properties… in these healthy markets… then you’ll be able to win the real estate investment game.
This is how you decide where to invest. If your state provides the right market conditions to allow you to succeed as an investor, then it makes sense to consider investing there! But if not, then look somewhere else.
That’s where you begin. Not with old, “standard middle class” thinking about what is and isn’t practical. Not with your feelings about how “safe” it is or isn’t to do something new and different. But with a solid understanding of what kind of properties will work for you… and where they are located.
When you purchase these cash-flow producing properties in these supportive markets, you’ve put yourself on the path to success. Whether your investment property is in a neighboring county… or halfway across the country.
Give us a call at (801) 990-5109 or schedule your free appointment here to build a personalized Wealth Plan. We’ll help you invest in real estate the right way ‒ that’s proven to work, and realistic for where you are today. You’ll discover why we’re so passionate about helping our clients grow their financial and lifestyle freedom by investing in real estate.