Embarking on real estate investments beyond your local turf, in unfamiliar areas without a reliable local network, may initially seem daunting, especially for newcomers. Yet, this leap into seemingly uncharted territory can be the catalyst for real estate investment triumph.
While many investors start with local deals, the truth remains: there are abundant opportunities beyond your immediate surroundings waiting to be explored.
Investing Out of State, and Why Everyone Should Do It
Investing across state lines allows you to align your real estate portfolio to your long term investing goals through:
- Removing Emotion
- Increasing Flexibility
- Building Your Team
- Diversifying Your Portfolio
- Focusing Your Intentions
1. Remove Emotion
Local biases and emotions often cloud judgment when evaluating investment opportunities. Proximity might lead you to consider a suboptimal investment merely because it’s conveniently located. Investing beyond your locale compels you to rely on objective property-specific data, increasing the likelihood of making decisions based on preset criteria and goals.
2. Increase Flexibility
Your local market might offer a limited range of attributes for your overall investment portfolio. Investing exclusively in your local area might confine you to options that don’t align with the ideal mix of criteria, such as population and job growth trends, geography, real estate prices, and local laws. Exploring investments outside your local market broadens your options and allows you to adapt your strategy to different market cycles.
3. Build a Great Team
Venturing beyond your local market necessitates building and relying on a team of professionals. Managing investments from afar is challenging, highlighting the importance of delegating tasks. Developing this skill is crucial, and once mastered in one market, it can be replicated elsewhere, expanding your reach and access to diverse investment opportunities.
4. Diversify Your Portfolio
Exclusively investing locally means placing all your real estate investments in one basket. This lack of diversification leaves you vulnerable to local challenges such as natural disasters, economic or governmental issues, or market recessions. Investing in multiple markets, both locally and out of state, provides diversification within your portfolio, safeguarding your investments against the fluctuations of individual markets.
5. Focus Your Intentions
Investing outside your local area requires a deliberate and intentional approach. It eliminates the possibility of making impulsive decisions based on emotions or convenience. The process involves thorough research and analysis, ensuring that each investment aligns with your predefined goals.
Conclusion: A Deliberate Journey
Every real estate investor should consider exploring opportunities beyond their local area. Investing out of state demands a more intentional approach, allowing you to make decisions aligned with your financial goals. The prospect of cherry-picking markets with high job and population growth, coupled with building a strong team, presents both excitement and challenge, making the venture entirely worthwhile.
Bonus Tip: Investing Passively in Real Estate Syndications
For those seeking a streamlined approach to out-of-state investing without the intricacies of team building, passive investment in real estate syndications is an excellent option. By joining EquityNest, investors can benefit from the expertise of the sponsor team, enjoying passive income and diversification across multiple markets and asset classes.
