The answer to your question is as wide as it is deep, and it can literally fill a book!
Iâ€™ve made and lost millions in real estate and have taught people for free in seminars on how to systematically invest in out-of-state investments. So in an effort to give you a compass and a little direction:
1. Assuming your plan is to hold the property for 5 years or longer, consider areas that have economic stability, as well as population and job growth. Do not invest in areas that display any stagnant economic factors. This is very important.
2. Make sure that the property will carry itself given your down-payment capacity. That means that whatever you put down on the property, it must produce a net Operating Income sufficient enough to cover your debt-service (mortgage payments) with some left over. Look for properties that have a capitalization rate (cap rate) of at least 7.0% or more.
3. Try to buy real estate that gives you immediate equity on your purchase. Although all of our real estate investment properties give you positive cash flow, we strive to find deals that provide immediate equity too. This is not as hard as you might think if you know where to look and how to structure the deal.
4. Regarding your single family home versus a condo purchase â€“ I lean towards the single family home because historically they have fared better in appreciation that condos, and they are usually easier to sell when you plan to exit out of your investment. I would also suggest you consider duplexes as part of your buy-and-hold portfolio.
5. Last, but certainly not least, seriously consider the tremendous opportunities available to you in out-of-state investments. Again this is a subject matter that can fill a book all by itself.
This is very brief answer to your question. You are welcome to call me if you would like a little more guidance on making your decision.
Norada Real Estate Investments