The reason why my group invests in out of state properties is so that we are not dependent on our local area’s real estate market whims. Yes, it totally sucks to be in the San Diego real estate market right now. However, other locations are not on the same cycle and are in fact poised to move up. If you limit yourself to being a “local” real estate investor, then you are much more vulnerable to the market ups and downs, much like being too heavily invested in tech stocks in the stock market. By being out of state, out of town, you can diversify.
Yes, certainly there are a lot of hassles dealing with people out of state. My property manager in South Carolina has not aggressively rented out my last remaining unit for the past few months. I’ve been talking to them about it but ultimately it comes down to being able to choose good people.
sdcellar is totally right that real estate lets you leverage. However, if you are able to keep the property for a long time, using leverage, appreciation, cash flow, and depreciation, you can get 25% to 30% return from real estate.
==update: just called my property manager in SC and they just got it rented. so, my bugging them has had results.
