How to Know When You Should Invest Outside Your Local Market

Post 24

By Joe Firmin              2-minute read

Investing in real estate outside your local market, in an area you may never visit, and where you have no trustworthy friends who you can call can seem nuts, especially for new investors.

However, this leap into seemingly crazy scary territory could really be the key to real estate investing success.

Most real estate investors begin with local deals, and while some get lucky, others do not. The truth remains: There are more opportunities “out there” than you could ever imagine, and you’ll never see or know about them without the courage, knowledge and prudence to explore outside your local market.

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. Here are 5 reasons to explore other markets of our great country:

  • Remove Emotion

  • Increase Flexibility

  • Build Your Team

  • Diversify Your Portfolio

  • Focus 


#1 – Take the Emotion Out

Personal biases, convenience, and emotions are highly likely to cloud your vision when in search of a local investment opportunity. For example, you’re more likely to give an investment a chance (even though the numbers are tight, aka: bad, and it needs a ton of work) because it’s in between your home and your favorite watering hole.

Investing in other spots forces you to rely on the property-specific data and removes the emotional component from the process, resulting in a higher probability that you’ll invest based on preset criteria and goals.

#2 – Increase Your Flexibility

It’s highly likely that your local real estate market can provide only a narrow slice of the all the attributes you’d need for your broad investment portfolio.

By constraining yourself to invest locally, you’re barred from options in other markets representing the ideal mix of investing criteria - population and job growth trends, geography, real estate prices, and government and state laws - that would help you, personally, to meet your investing goals.

Further, because each real estate market is hyperlocal, investing in a variety of different markets allows you to adapt your investing strategy to where we are in the market cycle.

Simply being open to the possibility of investing in real estate outside your daily commute expands your options and removes potential limitations.

#3 – Learn to Build a Great Team

Investing outside of your local market FORCES you to rely on others. In the same way you had to let go of the reins and let your work team members handle aspects of your department’s work; there’s just no way you can do everything from thousands of miles away, no matter how diligent and capable you think you are.

Building a great team is a learned and practiced skill. So is learning to leverage and rely on that team.

Once you properly execute this in one market, you can implement this skill anywhere, furthering your reach and the investment opportunities available to you.

#4 – Diversify Your Portfolio

Similar to the way your local market has limited attributes (population/job growth, demographics, geography, etc.) when compared across the states, by only investing locally, all of your proverbial real estate eggs are in a single basket.

A local-only strategy leaves room for little-to-no diversification and could be devastating to your real estate investments if any type of natural disaster, local economic/government issue, or market recession were to occur.

By investing in multiple markets, both locally and out of state, you’re actually creating diversification within your real estate portfolio and protecting yourself from the ever-changing market cycles and local dynamics.

#5 – Focus

When you invest outside of your local area, you’re automatically protected from “stumbling upon” an investment. Similar to the awesome scene in the Disney movie Up, where the dog continues to be distracted by the “Squirrel!” You can’t get a “great feeling” during a tour or buy into some real estate out of convenience.

Since you’d be throwing money in “sight unseen,” investing across state lines requires a process, intentional communication, and, possibly, more research and analysis on the property to ensure its qualities align with your investment goals. This is key. If you’re going to make an investment, make an investment – not a “Squirrel!” decision.

Let’s Bring It In

Investing money is already an emotional endeavor, but by investing out of state, you can be more deliberate and intentional about meeting your personal finance goals.

The opportunity to cherry-pick the markets that meet your investing criteria is totally worth it.

Bonus Tip: Invest Passively in Real Estate Syndications

One of the best ways to invest quickly and easily out of state, and not have to worry as much about the team-building part, is to invest passively in real estate syndications.

The sponsor team leads the project and allows the investors to enjoy passive income and diversification of multiple markets.

If you’re interested in learning more about becoming a passive real estate investor, consider joining the Freedom Network. It’s absolutely free to join with no commitment necessary. If you don’t join, we won’t be able to send you opportunities (sorry, SEC rules). So join today!

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