Out-of-state real estate investing can seem daunting at first, but it’s one of the best ways to grow your real estate portfolio as it opens up opportunities in stronger housing markets with better rent-to-price ratios and landlord-friendly laws.
In this guide, we will cover everything you need to know about investing in out-of-state real estate. This includes the benefits, helpful investing strategies, the best rental markets for cash flow and home appreciation, common mistakes to avoid, and tools and resources to help you manage from afar.
Quick Answer: Why Invest in Out-of-State Rental Properties?
Out-of-state real estate investing lets you take advantage of diverse real estate markets. This can lead to better cash flow, lower costs, and greater long-term growth potential. Many real estate investors choose this option when local markets are too expensive or do not provide good returns.
- Benefits: Investors can achieve higher returns in landlord-friendly states, diversify across markets, and grow portfolios more affordably than in high-cost cities.
- Strategies: Common investing strategies include turnkey investing, which involves buying renovated or new-build properties with management in place; buy-and-hold for long-term growth; BRRRR (buy, rehab, rent, refinance, repeat) for building equity; short-term rentals in tourist areas; and real estate syndications for passive ownership in larger deals.
- Risks & Pitfalls to Avoid: The biggest mistakes include buying without due diligence, skipping professional property management, chasing appreciation without stable cash flow, ignoring local landlord-tenant laws, and underestimating expenses.
- How to Start: Define your goals (cash flow vs. appreciation), research markets with strong fundamentals like job and population growth, build a trusted local team (property managers, lenders, turnkey providers, maintenance crew), always run the numbers, and have enough cash reserves set aside.
- Tools & Resources: Utilize sites like Zillow, RentCast, NeighborhoodScout, City-Data.com, and RealWealth’s free resources, which connect you with vetted real estate professionals, including turnkey teams offering off-market investment opportunities. Crunch the numbers with pro forma tools like Dealcheck.
- Bottom line: With the right strategy, team, and markets, investing in rental properties for passive income is one of the best ways to build long-term wealth and prepare for a successful retirement. RealWealth can help you find the top markets for rental properties and connect with trusted turnkey teams. Join today!
Out-of-State Real Estate Investing Benefits
For many investors, investment in their local markets may no longer be a viable option. In high-cost areas like California and New York, real estate prices have skyrocketed, making it difficult to buy, tenant-friendly laws make it difficult to be a landlord, and market rents can’t keep pace with inflation. In these situations, property taxes can eat into cash flow, and competition from both homeowners and investors makes it nearly impossible to find solid deals. That’s where investing in rental properties out of state opens the door to more substantial returns, portfolio diversification, and long-term wealth building.
Here are five of the most significant benefits:
1) Higher Returns & Cash Flow
Markets in the Midwest, Southeast, and Sun Belt often offer far better rent-to-price ratios than those in coastal or high-demand metros. Instead of chasing slim margins in your backyard, you can tap into markets with double-digit cap rates and strong rental demand.
2) Diversification Across Economies
When all your rental properties are in the same city or region, your wealth is tied to that single economy. Out-of-state real estate investing allows you to diversify risk across multiple job markets, industries, and housing cycles —a proven investing strategy for weathering economic downturns.
3) Faster Portfolio Growth
Buying a single property in an expensive market like Los Angeles or New York can cost you $1 million or more. With that same capital, you could purchase three or four rental homes in strong cash flow markets like Birmingham, AL, Cleveland, OH, or Columbus, GA. More doors usually mean more rental income, faster equity growth, and better scalability.
4) Access to Professional Property Management
The biggest mental hurdle for many remote investors is figuring out how to manage a property that’s 1,000 miles away. The reality is that technology and real estate professionals, such as property managers and turnkey teams, make it easier than ever to manage rental properties remotely while still staying on top of their performance.
5) Tax Efficiency & Market Advantage
Out-of-state investing allows you to take advantage of landlord-friendly states with lower property taxes, favorable eviction laws, and higher potential for net operating income. Choosing the right market can put thousands of extra dollars in your pocket each year.
Investor Tip: Instead of asking yourself, “Where can I invest near me?” start asking, “Which real estate markets fit my goals best?” Whether you want to focus on cash flow, equity growth, or a combination of both, exploring what markets have to offer beyond your local area can provide you with more opportunities to build wealth.
Out-of-State Real Estate Investing Strategies
There isn’t a one-size-fits-all approach to investing in rental properties out of state. The right strategy for you depends on your goals, risk tolerance, and how hands-on (or hands-off) you want to be. Here are the most common investing strategies that work well for remote investors and how to know if they’re the right fit for you:
Turnkey Investing
With turnkey investing, you buy fully renovated or new-build properties that already have property management in place. Turnkey investing is the most hands-off strategy, making it perfect for busy professionals who want cash flow and appreciation without the day-to-day hassle of being a landlord. At RealWealth, our vetted turnkey teams specialize in off-market opportunities across multiple U.S. markets.
Buy-and-Hold
For this strategy, you acquire single-family or multifamily properties in strong growth markets and hold them for the long term (typically 7 to 10 years or longer), hence the name “buy-and-hold.” This strategy generates wealth through both rental income and long-term appreciation. Out-of-state real estate investing for buy-and-hold works exceptionally well when you diversify across markets with strong population and job growth.
BRRRR (Buy, Rehab, Rent, Refinance, Repeat)
Popular with more experienced investors, BRRRR allows you to force appreciation and recycle your capital. While this can be a powerful way to scale, it’s harder to execute remotely unless you have a reliable local team of contractors, property managers, and lenders.
House Hacking
For this strategy, you buy a small multifamily property, such as a duplex, triplex, or fourplex, and live in one unit, while renting out the others. In the past, house hacking has typically been used as a local strategy; however, remote work has created opportunities for out-of-state investing, with investors eager to capitalize on low down payment options (3.5%) for FHA loans and live in a new area for a year to meet the loan requirements.
Short-Term Rentals
Investors leverage platforms like Airbnb or VRBO for short-term rentals in tourist-friendly or business-travel-heavy markets. These can deliver strong returns, but they come with added management complexity, local regulations, and risks associated with seasonality. It can be especially challenging if you’re remote and don’t have a strong co-host or property manager.
Real Estate Syndications
Instead of buying and managing property yourself, you can invest passively in larger multifamily or commercial properties that experienced operators manage. Real estate syndications allow accredited investors to pool funds, diversify at scale, and benefit from professional management. You can choose from real estate syndications in a variety of real estate markets nationwide, depending on your goals.
Real Estate Funds
One of the best ways to passively invest and diversify your real estate portfolio into many out-of-state markets at once is to invest in a real estate fund. RealWealth’s multi-family fund, for example, offers open-ended investments and is focused on buying and improving Class A/B apartment communities in growing U.S. markets. When investing in a fund, you can receive steady cash flow, long-term equity growth, and built-in diversification over a set number of years. Unlike a DST (highlighted below), funds typically do not qualify for 1031 exchanges and are best for those investing new capital.
Delaware Statutory Trusts (DSTs)
A Delaware Statutory Trust (DST) operates similarly to a real estate fund. Both options allow you to invest in large, high-quality properties and diversify your investment across different states. The key difference is that DSTs qualify for 1031 exchanges, allowing you to defer capital gains taxes when reinvesting, unlike most funds. Also, the “Delaware” part just refers to the legal structure, not where the properties are located.
Investor tip: If you are new to out-of-state real estate investing or are a busy professional with a packed work/life schedule, turnkey investing is one of the simplest ways to start investing without overwhelming yourself.
Out-of-State Investing Strategies at a Glance
Best Out-of-State Real Estate Investing Markets
Not all markets are created equal. At RealWealth, we categorize them into Cash Flow Markets, Appreciation Markets, and Hybrid Markets. Here is a list of the markets we recommend:
Cash Flow Markets (steady income, affordable prices)
- Indianapolis, IN – Affordable homes, strong rental demand
- Tuscaloosa, AL – Anchored by the University of Alabama and the medical sector
- Columbus, GA – Military presence (Fort Moore) drives stable rental demand
- Birmingham, AL – Affordable properties, reliable rent-to-price ratios
- Cleveland, OH – Robust medical sector, steady rental demand
- Cincinnati, OH – Diverse economy with steady rental demand and affordable housing
Appreciation Markets (long-term equity growth)
- Atlanta, GA – Population boom, strong job growth
- Dallas–Fort Worth, TX – Business-friendly hub with rapid expansion
- Jacksonville, FL – Population growth and a diverse economy
- San Antonio, TX – Military, tech, and healthcare growth
- Huntsville, AL – Aerospace and tech hub with strong job creation
- Cape Coral, FL – Lifestyle-driven growth near Florida’s coast
Hybrid Markets (balance of cash flow + appreciation)
- Dallas-Fort Worth, TX – Certain suburbs offer both stability and substantial growth
- Ocala, FL – Affordable entry point plus growth potential
- Oklahoma City, OK – Consistent cash flow with room for appreciation
- Kansas City, MO – Affordability, diverse and growing economy
- Chattanooga, TN – Tech investment and affordable housing blend both worlds
Best Out-of-State Real Estate Investing Markets at a Glance
RealWealth Advantage: Many of the recommended turnkey property teams we work with are in these markets. They offer newly built or rehabbed, single-family, and multifamily off-market rental properties. To see what types of rental properties are available, join RealWealth.
5 Common Mistakes to Avoid With Out-of-State Investing
Out-of-state real estate investing offers tremendous opportunities to diversify your portfolio and access strong markets, but it also has unique risks. Many investors make avoidable mistakes that can waste time, money, and peace of mind. Here are the most common problems and how to avoid them:
1. Buying Blind
One of the biggest mistakes is purchasing a property without proper due diligence. Photos and pro formas can look great on paper, but only inspections, rental comps, and trusted boots on the ground can confirm the real condition and value.
Investor Tip: Work with vetted local teams and always request third-party inspections and rent verifications before closing.
2. Skipping Property Management
Managing tenants, maintenance, and local compliance remotely can quickly turn into a second job. Some investors try to save money by self-managing, but end up with late payments, extended vacancies, and costly headaches.
Investor Tip: A professional property manager is worth their fee. Interview multiple managers and ensure they have strong tenant screening and clear communication practices.
3. Chasing Only Appreciation
Many new investors focus exclusively on markets with skyrocketing values, hoping to “time” appreciation. But appreciation-driven markets can cool quickly, leaving you with low or negative cash flow.
Investor Tip: Balance your portfolio with cash-flowing markets that provide steady income today, alongside markets with strong long-term growth potential in equity.
4. Ignoring Landlord Laws
Not all states are landlord-friendly. Some areas have rent control, lengthy eviction timelines, or strict tenant protections that can significantly impact profitability.
Investor Tip: Research landlord laws before investing in out-of-state real estate. States in the Southeast and Midwest often have more favorable laws for property owners.
5. Underestimating Expenses
From vacancies to maintenance surprises, many investors underestimate the actual costs of owning rental property. This is especially dangerous when you’re hundreds or thousands of miles away and need to hire trustworthy professionals for repairs and maintenance.
Investor Tip: Always budget conservatively. Factor in 5–10% vacancy loss, 8–10% property management fees, and 5–8% for maintenance and cash reserves.
RealWealth Perspective
As investors ourselves, we know that many investors fall prey to these costly traps when they begin investing in rental properties. That’s why we provide people with the resources and connections they need to be successful when investing in out-of-state real estate.
RealWealth membership is 100% free and includes:
- Investor education (webinars, guides, articles, live events)
- Connections to vetted turnkey teams
- Free strategy sessions with an expert investor
- Investor resources (real estate professionals, checklists)
Whether you’re buying your first rental property or expanding into multiple markets, our mission is to help you build wealth wisely and confidently.
Myth vs. Reality in Out-of-State Investing
Myth 1: You need to live near your rental properties.
Reality: With vetted property managers, investor-friendly lenders, and modern tech tools, you can successfully invest from anywhere. Many RealWealth members own properties in markets they’ve never visited. This can lead to better cash flow, lower costs, and greater long-term growth potential. Many real estate investors choose this option when local markets are too expensive or do not provide good returns.
Myth 2: Out-of-state investing is too risky.
Reality: All real estate has risk, but spreading your portfolio across multiple states actually reduces your exposure to one local economy. Due diligence, inspections, and conservative underwriting keep risks manageable.
Myth 3: Only wealthy investors can buy properties out of state.
Reality: Many strong rental markets have properties in the $100,000–$250,000 range, meaning you could get started with as little as $20,000–$50,000 down.
Myth 4: Managing remote properties is impossible.
Reality: Professional property managers and turnkey providers take care of daily tasks. You maintain control by reviewing reports and making important decisions, without having to be available for tenants.
How to Invest in Out-of-State Real Estate
Out-of-state real estate investing may feel overwhelming, but breaking it down into smaller chunks makes it more manageable. Here’s a roadmap first-time remote investors can follow:
1. Define Your Goals
Decide what you want your real estate portfolio to achieve. Are you investing for steady monthly cash flow, long-term appreciation, or building retirement income? Knowing this will shape your market selection, property type, and financing strategy.
2. Research Strong Markets
Look beyond your local area. Study population trends, job growth, economic diversity, and rent-to-price ratios. Tools like U.S. Census data, Niche.com, and City-Data.com can help you evaluate markets. Focus on places with both demand for rentals and landlord-friendly laws.
3. Assemble Your Team
Investing in out-of-state real estate requires a local presence. Build a network that includes a lender familiar with investor loans, a property manager with a strong track record, and regional real estate experts who are knowledgeable about the neighborhoods. For a more hands-off approach, team up with trusted turnkey providers who manage acquisition, renovation, or building, as well as property management.
4. Run the Numbers
Never buy a rental property based on emotion; use the deal numbers as your guide. Calculators like DealCheck help you analyze key metrics, like cash flow, cap rate, cash-on-cash return, ROI, and the property’s long-term appreciation potential. Always take the time to verify amounts for property taxes, management fees, and vacancy assumptions.
5. Perform Due Diligence
Protect yourself by conducting thorough inspections, reviewing neighborhood comps, verifying rent estimates, and checking crime rates. A strong appraisal and inspection report will give you confidence before closing.
6. Close with Confidence
With financing lined up, due diligence completed, and a reliable team in place, you can close on your first out-of-state rental property knowing you’ve minimized risk.
For an in-depth guide, check out our article, “How to Buy Rental Property & Earn Income While You Sleep.”
Investor tip: Start small, be patient, and seek help from other experts or a real estate mentor. There is a lot to learn about real estate investing, and growing your portfolio one property at a time can help you transition from newbie to expert. Choosing to invest in out-of-state rental properties helps diversify your portfolio and gives you access to markets with greater growth potential.
Tools & Resources for Out-of-State Investors
There are a plethora of online tools and resources for investors interested in out-of-state real estate investing. They make researching and analyzing markets easier than ever. By leveraging the right mix of platforms and services, you can minimize risk and make smarter, data-driven decisions from anywhere.
- Zillow.com & Realtor.com: Go-to platforms for property searches, neighborhood comps, and pricing trends. They’re handy for spotting market patterns and evaluating how affordable a market is compared to rental demand. Please note that the properties listed here are market prices. Many investors prefer off-market deals, such as those offered by RealWealth’s recommended turnkey providers.
- RentCast.com: When investing in out-of-state real estate, it’s essential to gather information on rental rates so you can better estimate your expected cash flow. This tool helps you avoid overestimating or underestimating rents and ensures your property’s numbers are realistic before you make a purchase.
- NeighborhoodScout.com: Offers deep data on demographics, crime rates, and school quality. Understanding the tenant base and safety of an area is crucial for long-term success, especially if you’re investing remotely.
- Niche.com: Great for evaluating schools and a neighborhood’s quality of life. Strong school districts often correlate with higher tenant demand and stable long-term renters.
- City-Data.com: A comprehensive resource with statistics on schools, neighborhoods, income, employment, and crime rates. This is a powerful tool for understanding an area.
- DealCheck.io: A robust deal analysis tool that helps investors quickly calculate ROI, cap rates, cash flow, and long-term projections. It’s an essential tool for stress-testing out-of-state real estate investing deals before making offers.
- RealWealth: Investors benefit from community and personalized guidance and support. RealWealth offers free education, vetted turnkey providers, live events, and one-on-one strategy sessions with experienced investors to help you avoid costly mistakes and get into strong markets confidently.
- Download “The Busy Person’s Guide to Getting Your First Rental in 90 Days” to get a step-by-step roadmap.
Investor tip: Use at least 2 or 3 tools for every deal. No single platform provides the whole picture. By combining property data with rental comps, neighborhood insights, and demographic stats, you can make significantly better out-of-state investing decisions.
Out-of-state real estate investing is a great way to enter more affordable, growth markets and diversify your portfolio as you work towards building long-term wealth. By investing in rental properties in leading U.S. markets, you can create streams of passive income no matter what part of the country you live in. The key to success is to always do thorough research, work with experienced property managers or turnkey providers, and follow a proven investing strategy. This will help you make sure your out-of-state investments generate consistent returns and reduce risk.
Final Thoughts
Out-of-state real estate investing is one of the fastest ways to grow your portfolio, diversify across markets, and achieve financial freedom. With the right strategy, the right markets, and the right partners, it’s possible to build wealth without being tied to your local market.
Next step: Join RealWealth for free to access vetted property teams in 12+ U.S. markets, schedule a strategy session, and start building your real estate portfolio today.
