Bill Bronchick

Investing Outside of Your Local Area
by Bill Bronchick

Out Of Town Investing

The old adage “The grass is always greener on the other side” can apply to a lot of situations in life. The fact is, to maintain the greener grass,  you have to know how and what it takes to nurture it. You also either have to visit the “greener” lawn occasionally or have someone qualified to take care of it.

This concept also applies to real estate investing. A lot depends on your due diligence and having a network of folks with “boots on the ground” at your location afar that are experienced, knowledgeable and trustworthy. These factors can be the difference between success and failure.

Investing Out of Town or Local Area

The Good Stuff

Let’s talk about why you might try to invest elsewhere and some of the upsides:

• Affordability. There are some markets (e.g., San Francisco) where property prices are out of sight and make breaking even difficult at best. A new area just might have better and more reasonable property prices that fit your business model and thus make a better investment.

• Availability. In “hot” real estate markets, it’s easy to sell, but it can be difficult to find and purchase a property at a price that makes sense for your business model.

• Diversifies Your Portfolio. It’s the case of not putting all of your eggs in one basket. For some investors with a lot of properties, investing in another location may make a lot of sense. If one area goes flat, there is another area that possibly is still performing.

• Market Timing. Timing can be essential! Keeping an eye on markets that aren’t as hot as your local market (but are headed that direction) could get you some great deals.

• Taxes. Taxes can be a prime consideration for investing in an area, whether it’s state, local or property taxes. More on this in a bit.

• Return on Investment. Sometimes your ROI can be enhanced by investing elsewhere. In some areas properties can be bought cheaply but still rented for nearly the same rates as a hot area, resulting in great cash flow!

WATCH NOWHow to Analyze a Deal in 30 Seconds or Less

The Bad

Let’s chat about some of the downsides of investing in non-local areas:

• Unfamiliarity with Outside Market. You absolutely have to know your potential market, inside and out. If you don’t know and/or don’t have a knowledgeable and experienced team, this could really come back to bite you.

• Lack of Knowledge on Local Laws and Regulations. Having a handle on the local laws and regulations is imperative. You not only want the investment to work for you, you want to stay out of legal trouble.

• Distance to Properties. We will talk a bit later about having a local “team” of knowledgeable and experienced folks in your distant area. The last thing you want or need to do is to have problems when you live a distance away and can’t take care of a pressing issue right away.

• Taxes. Real estate taxes, income taxes, property taxes and other expenses (e.g., HOAs) can really put a dent in your profit. Folks invest all the time in areas where the taxes can be burdensome, but you have to know in advance and figure them into your expenses.

• Entities. Entities can vary from state to state, especially the costs. Some entities such as Colorado cost only about $50 to set up and $10 a year to maintain. Other states can have fees of several hundred dollars, annually. Once again, if you know what you are dealing with you can put the expenses into your deal.

Putting Together a Team For Out Of Town Investments

Having a great team of folks that live and work in your new investing area is paramount to your success if you don’t want the hassle and expense of traveling to and from your investment properties frequently. Be picky and interview several candidates for each area of expertise. You may find the need for additional types of team members than listed here. Here is a short list:

  • Real estate agent
  • Property Manager
  • Appraiser
  • Property Inspector
  • Contractor and Handyman
  • Attorney
  • Bankers and Hard Money Lenders
  • Insurance Broker licensed in the local area
  • A local partner

Out Of Town Investing Due DiligenceDepending on your experience, investment strategies and business model, investing in areas outside of your local area may make sense. Like any real estate investment, you have to do your due diligence and have a team experienced in your local area that you trust.

Finally, one of the biggest mistakes that investors make is that they get in a comfort zone and assume that “no news is good news” from their out-of-state team. It is your responsibility to always keep your finger on the pulse of what is going on in that area. Make sure that your team communicates well, often and accurately. Make sure to keep an eye on the numbers, as they can change as the local market changes.

Here’s to your success!

Bill Bronchick
William Bronchick, CEO of Legalwiz Publications, is a Nationally-known attorney, author, entrepreneur and speaker. Mr. Bronchick has been practicing law and real estate since 1990, having been involved in over 600 transactions. He has appeared as a guest on numerous radio and television talk shows including CNBC Power Lunch. He has been featured in Who's Who in American Business, Money Magazine, the Los Angeles Times and the Denver Business Journal. William Bronchick has served as President of the Colorado Association of Real Estate Investors since 1996.

Bill Bronchick Products (9)
CoursesHow to Create a Bulletproof Corporation
CoursesHow to Create Your Own LLC and Family Limited Partnership
CoursesStep by Step Guide to Land Trusts
CoursesUltimate Guide to Buy and Hold
CoursesUltimate Guide to Fix and Flip
CoursesUltimate Guide to Owner Financing
CoursesUltimate Guide to Wholesaling
SpecialsWealth Protection Library
CoursesWealth Protection Strategies

Copyright Notice
Copyright 2002-2020 All Rights Reserved. Published with Permission of Author. No part of this publication may be copied or reprinted
without the express written permission of the Author and/or

Back to Top

Free Newsletter

Article Options
Printer Friendly Page
Send This to Friend

Author's Articles
10 Easy Tips for Finding Investment Properties
10 Inexpensive Ways to Spruce Up Your Rental or Rehab Property
60 Days To Your First Bargain Purchase
7 Real Estate Contract Buyer Clauses Checklist
7 Reasons to Use a Land Trust
7 Ways To Buy Foreclosure Property
9 Goal Setting Tips For Real Estate Investors
9 Mistakes New Real Estate Investors Make
A Review of the National Consumer Law Center
All About Property Disclosures
Apartment Investing - Investors Now Is the Perfect Time!
Are Real Estate Seminars Worth the Money?
Are You a Newbie at a Real Estate Club?
Are You Clear On What is a Good Deal
Are You Waiting on the Sidelines?
Bankruptcy, Foreclosure, & Credit - How it Affects You
Bankruptcy, Foreclosure, & Credit - Part II
Basics of the Real Estate Contract
Be a Smart Investor... Do the Math
Big Brother Is Watching You, New (Bad) Legislation Coming Your Way
Bubble, Schmubble - Flipping Works in Any Market
Bull vs. Bubble
Bulletproof Your Wealth with Family Limited Partnerships and LLC's
Buy A House - Get Thrown in Jail?
Buying at the Foreclosure Auction
Collecting Money Owed by a Tenant
Common Investor Legal Mistakes
Common Sense Mortgage Tips
Contents of a Good Short Sale Package
Contract for Deed
Create Monthly Cash Flow Without Any of Your Own Money or Credit
Dealing with Real Estate Agents
Dealing with the Dealer Issue
Dealing With the Due on Sale Clause - Part II
Do You Need a License to Flip Real Estate?
Equity Sharing & Partnerships
Essential Contract Clauses
Essential Contract Clauses II
Explaining Foreclosure Options to the Homeowner
Five Big Mistakes Newbies Make
Flipping Properties for Cash Profit
Flipping Versus Holding - Which is Better?
Get That Property Out of Your Name!
Getting Started as a Real Estate Entrepreneur
How Much Cash Should an Investor Keep in Reserve?
How to Create a Real Estate Cash Cow
How to Determine Property Values in Today's Market
How to Get a Hard Money Loan
How to Save Up to 90% on Title Insurance
HUD Properties, FHA & Title Seasoning
Illegal Flipping and Lender Seasoning
Investing in a Changing Market
Investing Outside of Your Local Area
Investing Strategy - Master Lease Option for Apartments
Keep a Positive Perspective in a Negative Market
Know Your Real Estate Laws
Learn the Landlord-Tenant Rules!
Lease Option a Junker!
Lease Option Tips & Strategies
Lease/Option 101
Lease/Option vs. Contract for Deed
Lease/Options & the Equitable Interest
Mortgage Broker vs. Mortgage Banker
Non-Income Verification Loans
Owner Financing Mechanics
Personal Property Trusts
Real Estate Investing Financing 101
Real Estate Investing is Just Like Weight Loss
Reduce Taxes By Investing In Real Estate
Risks of Buying Real Estate in Emerging Markets Out of State
Scripting Common Objections from Foreclosure Sellers
Setting Your Financial Goals
Seven Ways to Flip a Property
Should the Government Bail Out People in Foreclosure?
Should You Disclose on Short Sale Flips?
Should You Do Real Estate Full-Time?
Should You Use an Attorney's Fee Clause?
Tax Issues on a Subject 2 Deal
Tax Lien Investing 101
Ten Myths Preventing People from Succeeding in Real Estate Investing
The Basics of "Short Sales"
The Bona Fide Purchaser
The Ethical Real Estate Investor
The Forgotten Owner Carry
The Mortgage Elimination
The New Limited Liability Company
The Not-So-Handy Man's Guide to Fixing and Flipping Properties
The Property Recording System
The Role of Insurance in Asset Protection Planning
The Wrong Way to Invest in Real Estate
There is No Due on Sale Jail
Top Ten Ways to Get Sued - Guaranteed!
Understanding Loan Terms
Understanding The Mortgage Loan Market
Using A Home Equity Line Of Credit To Buy Properties
Using a LLC IRA for Real Estate Investing
Using Facebook as a Real Estate Investor
Using Trusts for Personal & Business Privacy
What Every Landlord Should Know About Discrimination
What to Do if a Tenant Abandons the Property
What You Need to Ask Before Joining a Coaching Program
Where to Incorporate: The Answer May Surprise You!
You Have to Sell a House to Get it Sold
Zero In On Motivated Sellers

Author's Products

How to Create a Bulletproof Corporation

How to Create Your Own LLC and Family Limited Partnership

Step by Step Guide to Land Trusts

Ultimate Guide to Buy and Hold

Ultimate Guide to Fix and Flip

Ultimate Guide to Owner Financing

Ultimate Guide to Wholesaling

Wealth Protection Library

Wealth Protection Strategies