Out-of-State [Real Estate Investing](/blog/brrrr-strategy-guide): The Complete Guide to Building a Remote Portfolio

I live in San Francisco. The median home price here is over $1.3 million. A 3-bed/2-bath single-family that might rent for $4,000/month sells for $1.2M+. That's a 0.33% rent-to-price ratio — mathematically impossible to cash flow with any conventional financing.

So I invest 2,000 miles away.

My portfolio spans three states I don't live in: Tennessee, Indiana, and Alabama. I've closed 23 out-of-state deals over eight years, and I visit my properties maybe once a year. Some of them I've never visited at all. My returns have consistently beaten my local market, and my management headaches have been surprisingly minimal — because I built the right systems and the right team.

Out-of-state investing isn't for everyone. It requires a specific skill set: the ability to build and manage relationships remotely, comfort with delegating, and a systematic approach to risk management. But if your local market is priced out of cash flow territory — and that includes most major coastal cities — it may be your best path to building a rental portfolio.

This is the complete playbook.

Why Invest Out of State?

The math is simple. Let's compare buying in my home market vs. out of state:

With $300K to invest, I can buy one negative-cash-flow property in San Francisco or nearly seven cash-flowing properties in Memphis. Diversification, positive cash flow, and a fraction of the per-unit risk.

The objection I hear most: "But San Francisco appreciates faster!" Historically true — but appreciation is speculation. Cash flow is contractual. I'll take 7 properties generating $180/month each ($1,260/month total) over one property that might appreciate but costs me $3,400/month to hold.

Step 1: Market Selection

Choosing the right market is the most important decision in out-of-state investing. Here's my three-tier filtering process:

Tier 1: Macro Filters (Eliminate Markets)

Start with 330+ US metros and filter down to 15–20 using these non-negotiable criteria:

Landlord-friendly laws deserve special attention. In California, an eviction can take 6+ months and cost $10,000+ in legal fees. In Tennessee, I can complete an eviction in 21 days for under $1,500. This difference is existential for your returns.

States I avoid for investment: California, New York, New Jersey, Oregon, Washington, Illinois (Cook County specifically), and any jurisdiction with rent control.

States I favor: Tennessee, Indiana, Alabama, Texas, Georgia, Florida, Ohio (select markets), Missouri, and the Carolinas.

Tier 2: Submarket Analysis (Narrow to 3–5 Markets)

From your 15–20 passing markets, go deeper on each:

Employer Diversification: No single employer should represent >10% of local employment. Company towns (one major factory, one military base) are single points of failure. Look for metros with healthcare systems, universities, government presence, and diverse private sector employment.

Section 8/Voucher Program Strength: Markets with well-funded housing authorities and consistent voucher availability provide a stable tenant pool with guaranteed government-backed rent payments. Check your target city's housing authority website for waitlist length and payment standards.

Insurance Costs and Natural Disaster Risk: Some otherwise attractive markets have brutal insurance costs. Coastal Florida can require $5,000–$8,000/year for wind + [flood insurance](/blog/hurricane-insurance-guide). Parts of Texas are seeing 30%+ annual insurance increases. These costs destroy cash flow projections. Get real insurance quotes before committing to a market.

Property Tax Rates: Texas has no state income tax but makes up for it with 2.0%–2.5% effective property tax rates. On a $200K property, that's $4,000–$5,000/year vs. $1,500–$2,000 in Tennessee. Factor this into your NOI calculations.

Tier 3: Ground-Level Validation (Confirm with Boots on Ground)

Before buying your first property in a new market, spend 3–5 days there:

1. Drive 5+ target neighborhoods at different times (morning, evening, weekend)
2. Meet 3 property managers in person — these are your most important relationships
3. Tour 5–10 properties to calibrate your eye for that market's pricing, condition standards, and tenant expectations
4. Meet a local investor-friendly agent who knows the rental market (not just retail homebuyers)
5. Visit the county courthouse — check eviction filings to understand local tenant quality
6. Eat at local restaurants, talk to residents — get a feel for the community's economic energy

This trip costs $1,500–$2,500 including flights, hotel, and meals. It's the best due diligence money you'll spend.

Step 2: Build Your Core Team

Out-of-state investing is a team sport. You cannot do this alone. Here are the 6 essential team members:

1. Property Manager (Most Critical Hire)

Your property manager is your eyes, ears, and hands on the ground. A great PM makes out-of-state investing feel easy. A bad PM will cost you more than they save.

What to look for:

• Manages 200+ doors (enough experience, not too stretched)
• Specializes in your property type (SFR vs. multifamily)
• Uses [property management software](/blog/best-property-management-software-2026) (AppFolio, Buildium, or RentManager)
• Has a maintenance crew or established vendor relationships
• Provides monthly owner statements with full detail
• Communicates proactively, not just when there's a problem

Fee structure to expect:

Red flags:

• Won't provide references from current investor-clients
• Guarantees zero vacancy (nobody can guarantee that)
• Requires a long-term contract with expensive termination penalties
• Doesn't have an online owner portal
• Can't tell you their average days-to-lease and turnover cost

Interview 5 property managers. Hire the one who asks YOU the most questions. A PM who wants to understand your investment goals, risk tolerance, and communication preferences will manage your property the way you want — not the way that's easiest for them.

2. Real Estate Agent (Investor-Focused)

You need an agent who understands investment math, not one who shows you "charming" properties with "great potential." Your agent should be able to discuss cap rates, cash-on-cash returns, and neighborhood trends without hesitation.

How to find them:

• BiggerPockets forums — search for your target market and see which agents are active
• Ask your property manager for referrals (PMs work with investor-focused agents daily)
• Local REIA (Real Estate Investors Association) meetings

3. Lender (Investment Property Specialist)

Local community banks and credit unions in your target market often offer better terms for investment properties than national lenders. Additionally, DSCR lenders have exploded in popularity — they qualify based on the property's income rather than your personal DTI ratio.

Build relationships with:

• One conventional/portfolio lender (best rates for first 5–10 properties)
• One DSCR lender (for scaling beyond conventional limits)
• One [hard money lender](/blog/hard-money-loan-guide) (for deals that need fast closing or heavy rehab)

4. Contractor/Handyman

Your PM handles routine maintenance, but for larger rehab projects you need a direct relationship with a reliable contractor.

How to vet remotely:

• Get 3 bids for every project over $2,000
• Require photo documentation at each phase
• Use draw schedules (pay in 3–4 installments tied to milestones)
• Check their license and insurance on the state licensing board website
• Start with a small project ($500–$1,000) to test reliability before giving them a $20,000 rehab

5. Home Inspector

Find an inspector who works with investors and understands what matters for a rental property vs. a primary residence. They should provide detailed reports with photos and cost estimates for every issue found.

6. [Real Estate Attorney](/blog/how-to-build-real-estate-team) (or Closing Agent)

In some states, attorneys handle closings. In others, title companies do. Either way, have an attorney who understands investment transactions review your first few deals in a new market. Cost: $500–$1,000 per closing.

Step 3: Deal Sourcing Strategies

The MLS (Your Agent)

Most of my out-of-state deals still come through the MLS. Your investor-friendly agent should set up automated alerts filtered by: price range, property type, target neighborhoods, and minimum bed/bath count. I receive 5–15 alerts per week per market and analyze the best 2–3 in depth.

Turnkey Providers

Turnkey companies sell fully renovated, tenant-occupied properties to out-of-state investors. They handle the rehab, tenant placement, and often ongoing management.

Pros: Low effort, immediate cash flow, no rehab risk Cons: Premium pricing (15%–25% above market), quality varies wildly, some are outright scams

If using turnkey providers:

• Verify their track record (5+ years in business, 100+ units sold)
• Get references from buyers who purchased 2+ years ago (not recent buyers)
• Always get your own independent inspection — never rely on theirs
• Verify rents independently with Rentometer and local PMs
• Check online reviews on BiggerPockets, Google, and BBB

Wholesalers

Wholesalers find off-market deals and assign the contract to you for a fee ($5,000–$15,000 typically). These can be excellent deals, but vet the wholesaler carefully and always verify the ARV (after-repair value) independently.

Direct-to-Seller Marketing

Even from out of state, you can run direct mail campaigns, skip-traced cold calling, and pay-per-click ads targeting motivated sellers in your market. This is more work but produces the best purchase prices. I use PropStream to pull lists and a VA service to handle the calling.

Step 4: Remote Due Diligence Process

Buying a property you've never seen requires extra discipline. Here's my process:

Day 1–2: Desktop Analysis

• Run full financial analysis (NOI, cap rate, CoC, DSCR)
• Pull comps on PropStream and Redfin
• Google Street View the property and surrounding 4 blocks
• Check crime data, school ratings, flood zones
• If numbers work: schedule inspection

Day 3–7: Inspection and Physical Assessment

• Licensed inspector conducts full inspection (you attend via FaceTime/video call)
• Sewer scope
• Request 100+ photos from inspector and agent
• PM drives by the property and gives an honest assessment on rent potential and condition

Day 7–14: Verification

• Title search initiated
• Insurance quotes obtained
• Property manager confirms rent estimate in writing
• Contractor provides rehab estimate (if applicable) with photo documentation
• Verify property taxes, zoning, and permit history

Day 14–21: Final Decision

• Reconcile all due diligence findings
• Run updated financial analysis with actual (not estimated) numbers
• Go/no-go decision

The FaceTime inspection is non-negotiable. Have your inspector walk through the entire property with their phone camera on. Ask them to show you specific items: the electrical panel, water heater label, HVAC unit, roof from the ladder, under every sink, the foundation perimeter. A 90-minute video walk-through catches 90% of what an in-person visit would.

Step 5: Remote Management Systems

Communication Cadence

Technology Stack

The Maintenance Approval Framework

Set clear guidelines with your PM upfront:

This framework eliminates 80% of PM communication while maintaining control over significant expenses.

Step 6: Scaling Your Out-of-State Portfolio

The Progression Strategy

Properties 1–3: One Market, One Property Manager Learn the market deeply. Build relationships. Make mistakes on a small scale. Don't diversify across markets until you've mastered one.

Properties 4–8: Same Market, Consider Second PM Having two PMs in the same market gives you backup if one underperforms, and natural benchmarking (you can compare their vacancy rates, turnover costs, and communication quality).

Properties 9–15: Add a Second Market Diversification across markets protects against local economic downturns. Apply the same market selection and team-building process.

Properties 15+: Systematize and Delegate At this scale, hire a virtual assistant ($5–$10/hour via OnlineJobs.ph) to handle: PM communication tracking, bookkeeping entries, insurance renewals, and property tax appeals. Your role shifts from operator to portfolio manager.

Financing Scale Challenges

Common Out-of-State Investing Mistakes

Mistake 1: Choosing a Market Based on One Metric "Memphis has great cap rates!" Sure — but which Memphis? There are neighborhoods with 10% cap rates where you'll spend all your profit on evictions and repairs. Always use a multi-factor scoring framework.

Mistake 2: Hiring the Cheapest Property Manager The PM who charges 7% instead of 10% saves you $42/month on a $1,400 rent property. But if they take 3 extra weeks to fill a vacancy, that costs you $1,050 in lost rent. The cheapest PM is rarely the best value.

Mistake 3: Not Visiting Your Market Before Buying Google Street View is not a substitute for boots-on-ground market research. Spend $2,000 on a market visit before spending $50,000+ on a down payment. The in-person calibration is irreplaceable.

Mistake 4: Over-Relying on Turnkey Providers Turnkey can be a great starting point, but building your own team and sourcing your own deals produces better returns. Use turnkey for your first 1–2 properties while you learn the market, then transition to direct acquisitions.

Mistake 5: Micromanaging Your PM If you hired a good PM, let them do their job. Calling about every $75 maintenance charge or questioning every decision undermines the relationship and wastes everyone's time. Set clear expectations upfront, review results monthly, and intervene only when performance metrics slip.

Mistake 6: No Emergency Fund Each property should have $3,000–$5,000 in reserves for unexpected expenses. When you're 2,000 miles away and the HVAC fails in July, you need to wire money immediately — not scramble for funds. Keep reserves in a high-yield savings account, segregated by property.

Is Out-of-State Investing Right for You?

Good Fit If:

• Your local market has a rent-to-price ratio below 0.5%
• You're comfortable delegating and managing through systems
• You have $30,000–$50,000 minimum to invest per property (including reserves)
• You're willing to invest time upfront building a team
• You think in terms of processes and metrics, not emotions

Not a Good Fit If:

• You want to drive by your properties regularly
• You can't sleep at night knowing someone else is managing your asset
• Your local market offers viable cash flow (lucky you — invest locally first)
• You don't have the capital for reserves on top of acquisition costs

The Bottom Line

Out-of-state investing has become the dominant strategy for investors in high-cost markets, and for good reason. The combination of technology (online portals, video calls, digital banking), mature property management companies, and accessible market data makes it more viable than ever.

But it only works with the right team, the right systems, and the right expectations. Build deliberately. Start small. Trust your process over your gut. And always, always maintain reserves — because when you're 2,000 miles away, you need to be able to solve problems with money, not with your physical presence.

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