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
button over here and become a member
of our community. We publish videos
multiple times a week. And of course, you can click
on any of the other playlists that we have in our description
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.

55 thoughts on “Buying Rental Property Out of State | Real Estate Investing for Beginners

  • Hi Mr. Morris. I like your videos, you delivery valuable info all the time. I am looking forward to get into the RE business and invest in rentals. I would like to know for how much you sale your rehabs properties. This is my email – [email protected]

  • Dope Video! Especially the last point: RELAX!! It seems we tend to forget that which is the whole reason we do this!

  • How long should I wait until transferring a property to an LLC? What are the chances of banks calling a due on sale clause? Has this happened to you or anyone you know?
     Thank you in advance !

  • Mr. Morris, what about closing on the property from out of state? How does that closing process work if you are not physically there to sign papers and whatnot?

    Thank you!

  • i love your videos. definitely need to reach out to your company for building my portfolio for rentals in and out if state!

  • Hello Clayton,

    When you are debating on buying across state lines do you ever view the property in person or do you rely on the inspection results and your property management team when deciding whether or not to purchase?


  • Good to know other people do this. Thanks. NY is so expensive where I currently reside. I was thinking like Atlanta where my uncle owns 9 properties or NC.

  • This is great information, But how do you find a good Contractor if your not living in the same State as the Property??

  • I'm looking into buying in several different states, what are the issues, if any, I'll face as an out of state LLC purchasing and renting out properties? What would you recommend?

  • If you buy out of state, can you do it all and start earning income from your home? If you have to travel even few times a year, that's going to severely hamper your ROI?

  • I understand you're an incredibly busy man, but I don't live far from New Jersey and am looking into purchasing my first rental property. What would it take for you to let me take you out for a few beers and ask you few a questions? Your videos are great, no doubt, but I have some questions that I believe are overlooked by the majority of new investors. If you could give me just an hour or two of your time, it would be greatly appreciated.

  • Thank you so much for making these videos. I've been wanting to do this for years and just never been able to understand it. I am a funder/processor working for a Lender and I've seen so many investors come through refinancing their properties and always wondered how they got started.

  • Been watching your videos religiously for about a month single mom looking to start investing in real estate. I live in Florida but wanted to do like u did and find something much cheaper out of state. I have a few questions… 1. How did u choose Michigan? Was it just a random choice? 2. Did you go there to create your team? To find your contractor, property manager ect.

  • When you get a hold of these properties do you do home inspections specially on foundation and structural?

  • Hi Clayton, great tips as usual, would you be able to clarify on setting up an LLC outside of your state. Do you pay double tax for the rental property at end? (Taxes on your state and in the state the property is in)? I have recently purchase my first rental property in GA, I live in FL. I am considering setting up an LLC in GA and transfer the deed to it. Your thoughts…

  • Should you visit the property first before you buy it (buy a plane ticket to get there) , or do you recommend doing this all remotely?

  • What are your thoughts on leasing a vehicle vs owning one? From the same perspective of renting vs owning your personal residence…

    I own my 2015 Nissan free and clear, however, if I sold it I would I could use that capital to invest. Thoughts?

    Thank you!!

  • I'm in Portland, OR and prices here are ridiculously high, as well. I'm sure there are some people here that work their tales off to dig out a few deals, but the prices and costs to hold are just crazy.

  • Is there a software you can buy to find out database on what cities are the best to invest in. I’m talking about analytical software to show economic growth, population growth, etc… or do I have to contact investment companies or something to help out on that part. Thanks!

  • I was wondering, how does one purchase turnkey properties from you guys and what is the complete price per property?

  • I'm a first time investor looking at the Fort Wayne and indianapolis markets. Do you experience or insight that you can provide for these areas. Perhaps any tips for finding desirable markets for good cash flow?

  • i have 4 houses out of state. should l set an LLC for each one ? I heard that i can put them in a single one LLC portofolio ? please help me with this question

  • This is great I’ve watched many videos and I am ready! The only thing I don’t understand and cannot wrap my head around is why are people renting $50k homes for $700 a month? Why are they not buying? What’s the tenant turnover percentage? I would greatly appreciate an answer thank you!

  • Is it recommended to get contractor in that other state or work with one in your current state that you're already familiar with? is it recommended to visit the property in person? And what's the best way to close on the property in the other states… do you have to do that in person?

  • Do you have rental properties in Florida? I'm thinking about buying rental properties there. After I watched your videos I really want to start real estate invesment.

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