In State Versus Out Of State Real Estate Investing

Nov 23, 2021

Is it better to invest in or out of state now? 

A lot of things have changed significantly over the past two years. It has certainly revived the debate and dynamics of investing locally versus in other states across the US. 

So, which are the best moves to make now, and what guiding factors should be considered in your decision?

The Pros & Cons Of Investing Locally Vs. Out Of State

Investing close to home, down the street where you can go by your real estate investments on a daily basis can bring some comfort to some investors. Others find it distracting, and ultimately burdensome, resulting in emotional versus objective investments. We know how that can turn out. 

After the unprecedented restrictions and disruptions of COVID, many investors were shaken up. Things that they never imagined possible happened. Of course, it is worth pointing out that real estate investors are also enjoying their best and most profitable years on record in the wake of that as well. 

Still, the concern of being able to travel to visit investments, and the potential enhanced travel costs are understandable concerns and debates some investors may be wrestling with internally. 

This is made harder as the best value and best performing investments are often out of state. Many investors are priced out of directly investing in their own cities. And the best growth can be a few states away. 

Location, Location, Location

It is often said that real estate is all about “location, location, location.” 

What most don’t get is that it doesn’t always mean what they think it does. It doesn’t mean the best investments are always on the most prime lots, or in the most prime blocks of financial centers. COVID and how it has completely transformed places like Manhattan and San Francisco are big reminders of that. 

It’s about value, performance, and growth potential. 

That may be in New Jersey, or somewhere else. 

The Need For Diversification

More than ever COVID should have reminded us about the importance of diversification. 

In fact, while it is often said that real estate is about location, I’d argue that successful investing is even more about diversification, diversification, diversification. Including, but not limited to geographic diversification. 

It is not financially responsible to only invest in one location. In fact, it is highly risky and dangerous. So, this really isn’t an either or question. 

In order to invest safely, intelligently and the most profitably, we need to be investing in more than one place. It is vital. 

How To Do It Right

If out of area investing is essential, then the real question to ask here is how to diversify well?

Whether investing down the street or on the other side of the country it is about doing it competently, with great professional third party management. It is about finding the best options that bring together local expertise and macro mastery of the market and type of investment you are putting capital into.

Today, this is often through a fund and picking a reputable operator who will handle all of this, rather than getting lost in the weeds, worrying about individual properties and units, notes or tax liens.

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund