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Out-of-State Real Estate Investing: How to Find the Best Markets for Higher Returns

When it comes to multifamily investing, staying in your backyard can only take you so far. Some of the best opportunities for cash flow, appreciation, and portfolio growth are sitting hundreds—or thousands—of miles away. Out-of-state investing isn’t just for the big players anymore. With the right strategy, data, and team, you can tap into higher returns and hedge against local market volatility.


Here’s how to evaluate and choose the best out-of-state markets—without flying blind.


Why Go Out-of-State?


Out-of-State Real Estate Investing: How to Find the Best Markets for Higher Returns

Every market has a cycle. If your local market is tapped out with sky-high prices, razor-thin cap rates, or heavy regulation, looking elsewhere is a smart hedge.

Out-of-state investing allows you to:


  • Access better cash flow: Many secondary and tertiary markets offer stronger returns.

  • Diversify your portfolio: Reduce risk by spreading your assets geographically.

  • Find landlord-friendly environments: Some states and cities favor property owners more than others.


But it’s not just about packing a bag and picking a city off a top-10 list. It’s about knowing what to look for.


Step 1: Start With Macro Market Fundamentals


Don’t chase hype—follow the data.

Look for metros with:

  • Strong population growth

  • Diverse job markets and employment gains

  • Affordable housing relative to income

  • Positive migration trends

  • Low vacancy rates and rising rents


Tools like U.S. Census data, Redfin migration reports, and CoStar market snapshots can help you narrow your focus.


Hot tip: States like Texas, Florida, and the Carolinas have been investor favorites for years for a reason. But don’t ignore up-and-coming regions like the Midwest, where cash flow is strong and competition is lighter.


Step 2: Zoom Into Submarkets


Once you’ve identified a few promising metro areas, zoom in.

Great cities still have bad neighborhoods. Focus on:


  • Proximity to employment centers or universities

  • Transit access and walkability

  • Revitalization efforts or public infrastructure investments

  • Crime trends and school ratings


Don’t be afraid to walk the block virtually via Google Maps and compare listing photos with real street views. Better yet, talk to local brokers and property managers to get the real scoop.


Step 3: Know Your Investor Profile


Are you chasing cash flow or long-term appreciation? Do you want heavy value-add or turnkey?


Understanding your own goals will help you match with the right market. For example:

  • Cash Flow Focus? Try markets like Indianapolis, Cleveland, or Birmingham.

  • Appreciation + Growth? Look into Boise, Raleigh, or Tampa.

  • Balanced Strategy? Consider markets like Phoenix, Salt Lake City, or San Antonio.


Step 4: Build Your Boots-on-the-Ground Team


Out-of-State Real Estate Investing: How to Find the Best Markets for Higher Returns

This is where most out-of-state investors fail—or win big.

You need:

  • A trustworthy property manager who knows local tenant laws and pricing.

  • A local broker who understands off-market and on-market deal flow.

  • A reliable contractor or inspector who won’t sugarcoat repairs.

  • An attorney or title rep familiar with local closings and regulations.

Start interviewing before you buy. A great team is worth more than a cheap deal.


Step 5: Visit (If You Can)—Then Systematize


Nothing replaces local insight. If possible, visit once to meet your team, tour the neighborhood, and walk potential properties.


But after that? Systematize. Use property management software, video inspections, and regular reporting to keep your operations running smoothly from afar.


Red Flags to Watch Out For


  • Overheated hype markets with cap rates below 4% and inflated expectations.

  • Political instability or strict rent control laws that could cap your upside.

  • Inexperienced local teams that promise the world but underdeliver.

  • Low rent-to-price ratios (ideally, you want 1% or more per month).


The Bottom Line


Out-of-state real estate investing isn’t about gambling in unknown territories. It’s about using data, building relationships, and taking a disciplined approach to scaling your portfolio where the numbers actually work.


Done right, you can find deals that outperform your home market, diversify your income streams, and build real wealth—even from thousands of miles away.


Ready to go beyond your ZIP code? Start by running the numbers, talking to local players, and thinking like a national investor.


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—Justin Brennan

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Justin Brennan
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