Buying Rental Property Out of State | Real Estate Investing for Beginners

How to buy rental properties
out of your state– that's today's video. Let's dive in. [MUSIC PLAYING] Hey, there. I'm Clayton Morris,
the President and Founder of Morris Invest. I'm a longtime real
estate investor. And today, we're going
to talk about buying rental properties out of state,
out of your own backyard. That's frankly how I buy
all of my properties. And that's what my team
does at Morris Invest. So I don't buy any
properties in my backyard, which is New Jersey. There's no way. Property taxes are
ridiculously expensive. Properties are
ridiculously expensive. And therefore, my ROI
would be in the toilet. So should you buy rental
properties across state lines? Here's how to do it. Number one, you
can't do it alone. So if you're going to buy rental
properties across state lines, you need a team.

You need partners in
order to make this happen. You could, of course, use
a turnkey rental company like ours. That's one option. And I'm not selling you on it. But you could
absolutely do that. The other option, though,
is to do it yourself and to find properties
yourself, rehab them yourself, and build that team. But number one, you
cannot do it alone. If you think you're going
to do it all by yourself, you're lying to yourself.

You've got to surround yourself
with people that can help you– the property management team,
contractors, your insurance folks, your title company. All of those people are going to
have to help you at some point. So just remember, you
can't do it alone. My second tip for buying
across state lines– please make sure that you
just fall in love with ROI and you don't fall in
love with real estate. It's a common theme that
I see among new investors. They fall in love with
a cute little bungalow, the little cute little
pictures that they see online.

Remember, all real estate's the
same– four walls and a roof. Fall in love with the
numbers, the return that you're going to get on your
investment, and not the fact that it has adorable little
front porch and green paint. Don't do it. Don't be allured by
that, especially when you have 20 properties. You're not going to care
that property number one was an adorable little bungalow. So fall in love with ROI,
your Return on Investment, and your numbers,
not real estate. Step 3– what legal
entity are you going to be acquiring
these properties in? And where are you going to
set up this legal entity, like an LLC or an S corp? Personally, for us, we have LLCs
set up in the different states where we own our
rental properties.

Now, I'm not an
accountant or a lawyer. So seek the counsel of your
own accountants and lawyers on this. But I will say that
our accountants have advised us to set up
LLCs in the states where we own our properties. That way, the LLC owns it and
you're protecting yourself from being sued. And then your other assets,
your personal assets, are then protected against– from the LLC– very,
very important to know what type of a legal entity
you're going to set up and where you're
going to set it up.

It's very easy to do also
just by going to the state's Department of State website. So if you're buying them,
for instance, in Michigan, you would go to and click on the Start New Business tab. And you can be up and
running in moments. It's usually, like,
$100 to set up an LLC. Number 4– property management. If you're going to
buy out of state, don't think that
you're going to manage that property by yourself. You're going to need a
property management team that's going to be able to be
there on the ground, deal with the Board of Health
when they decide to drive by and send a violation letter.

They can handle it. They can get right
out to the property, make sure that the branches
are removed from the gutter, make sure that the debris
and trash is out of the yard, whatever it is. But you need a great
property management team that can manage
your property from afar. You do not want to try to do it.

You do not want to try to
receive phone calls at 2:00 in the morning from
an angry tenant because you are an
absentee landlord. Don't do it. Don't make that mistake. Number 5– this might be
the most important tip. Do some research, but
not too much research. I see analysis
paralysis all the time for people who rely
on the internet. Now, let's be honest. You're out of state. So you're going to spend a lot
more time on the internet doing research about the properties
and areas and neighborhoods that you're going to buy. And that's fine. But remember that the internet
can only get you so far. And at some point, you've
just got to take action.

Get a good idea of your returns. Make sure you know your ROI. Make sure you've got a great
property management team. And don't spend too
much time hanging around in internet forums and reading
crime data websites, which are mostly inaccurate
to begin with. So spend a little time
doing your research, but don't let it be
debilitating and stop you from taking action. It's really, really important. Step 6 in my process of
buying out of state– get an inspection. This is incredibly important. So you're buying a property. Maybe it's already rented or
maybe it doesn't need any work, so to speak.

Get an inspection
on the property. Now, chances are if you're
working with a great team, they're going to go through
line by line on that inspection and try to square
any inaccuracies or problems with the property. Inspectors are paid to nitpick. So they're going
to find anything. They're going to
find tons of stuff. That's what they do. So I love inspectors. But they're going to find stuff. That's what they do. Some of it may be totally
irrelevant to turning it into a great rental property. But some of it
might be important. And therefore, you can square
that with your contractors, making sure that they are fixing
this, taking care of that. But get an inspection. Let the realtor know, if
you're working with a realtor, you want to get an
inspection on the property. You're going to spend
$500, whatever it is. But then you have all of
that documentation there.

You can hire a
contractor to come in. Maybe it's going to cost
you $10,00, $15,000, $20,000 to rehab the property. But now you know
all of the things that you want to
fix in the property. And you can hand that right over
to your contractor to get it up and running and get it fixed. At Morrison Invest, we
work with inspectors all the time who once
they do an inspection will go through line by line and
match it up with what we're doing on the rehab and make
sure that it all lines up, or if something's missing
one way or the other, then we'll address it with
our investor that way. So inspection's very important. Go through them. Pay for it. Get it done. Get an inspection,
especially if you're buying across state lines. And step 7 in my
process is to relax. If you are buying rental
property for positive cash flow and creating more legacy
wealth in your life, that's the whole point. So sit back and let those
rent checks start to come in.

And don't nitpick over
every little thing. And don't be annoying. You're going to cause
yourself way more stress than you need to. If you and your wife sat down or
your wife and husband sat down and your plan was to
acquire 20 rental properties and create a certain
amount of cash flow and that cash flow is
starting to come in and you're on property
three and property four now and you start to see
that cash flow coming in every month like
clockwork, relax.

Enjoy it. Go take that vacation
that you wanted to take. But that's the whole
point of creating cash flow– is to enjoy it, to
create that life that you want, to create that
financial freedom. So sit back, relax, and enjoy
the rental property experience that you're on. Click on the Subscribe
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We publish videos
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for this video below. We'll see you back here
next time, everyone. Go out there, take action, and
become a real estate investor. And relax..

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