5 Ways Out-of-State Real Estate Investing Fast Tracks Early Retirement

Where should you invest in real estate? It’s the age-old question. We can make an excellent case for a few specific markets, but we want to speak more generally here. Real estate investment strategy is often about the slow zoom-in—focusing on general principles that grow in specificity as you move towards your personal pinpoint.

So where should you invest? Easy answer: Out-of-state. 

Out-of-state real estate investing can be a powerful tool for accelerating early retirement, especially when local markets are expensive, saturated, or offer low cash flow. If you’re after an early retirement, investing beyond your local market can get you there sooner rather than later. Here’s how:

5 Ways Out-of-State Investing Accelerates Your Financial Goals

#1 – Higher Cash Flow Potential

Investing in more affordable out-of-state markets often yields higher rental income relative to property prices. For example, $100K property in the Sunbelt might cash flow $300–$400/month. But, by comparison, a $600K property in a high-cost market might barely break even. Success in real estate investment isn’t about holding the most expensive properties. (In fact, it’s usually about holding properties in line with the median!)
It's about strategically pitting lower market costs against strong rental demand to maximize your cash flow potential.

#2 – Access to Better Markets

Out-of-state investing lets you cherry-pick markets with:

• Strong job and population growth
• Investor- and tax-friendly laws
• High rent-to-price ratios
• Diversified economies

Instead of being stuck with your local market, you can strategically invest in areas with superior investment fundamentals. You’re not resigned to where you are. And remember, “better” is relative. It depends on what you, as an investor, are looking for out of your portfolio. Evaluate markets based on the fundamentals while stacking them up against your personal financial goals.

#3 – Faster Portfolio Scaling

We’ve said this before and we’ll say it again: cheap properties don’t make world-class portfolios. However, price is relative. Cheap to you might not be cheap to someone else. That’s why we want to consider the market median. 

Think about it. Right now, the most expensive median home prices in the U.S. are in Hawaii at a whopping $982k. The cheapest median? West Virginia, at just $166k. So, for the price of one property in Hawaii, you could have almost six in West Virginia.

That’s the example of extremes, but consider the principle at play here. The “cheap” West Virginia homes aren’t poor quality. They’re in line with the market median. But for you, who might live in an expensive city, they might seem “cheap.” And you can leverage that to your advantage!

Further Reading: Your Investment Strategy Shouldn’t Rely on Cheap Rental Properties

You’ll be able to build equity faster (smaller mortgages and more opportunities to buy in cash) and reinvest more frequently (via 1031 exchanges). 

With less capital required per deal, you can buy more doors sooner, speeding up your financial independence timeline. Spreading your investments across multiple markets, states, and properties:

• Protects against local economic downturns
• Reduces market-specific risk (economic, environmental, etc.)
• Gives more stability and predictability to your retirement income.

#4 – Geo-Arbitrage Benefits

We’re about to drop a fancy term: geo-arbitrage. It simply means leveraging geographic difference (specifically, the cost of living) to optimize your finances. Even if you're not living in the market you invest in, you're leveraging lower cost bases with a higher ROI on each dollar invested. Based on the market, maintenance, contractor work, and repair costs will be lower.
It's like traveling to another country when the U.S. dollar is particularly strong. You’ll get more in local currency for your dollar based on the exchange rate. What seems like a lot of money in the country you’re visiting may be “chump change” to you! 
So don’t just think about advantageous property prices. Consider the upkeep, taxes, and other costs. They stack up differently based on market.

#5 – Forces You to Build a Team

Some people still insist that out-of-state investing isn’t wise. This is often because they picture investors buying sight unseen and trying to manage their investments from a far. That’s not usually – and shouldn’t be – the case. Instead, out-of-state investors should build a world-class team to help systematize and delegate their investors. 

You’re a business owner, not a landlord.

So, build that team you can count on with financial advisors, turnkey partners, trusted property management, etc.

Doing so makes your investing truly passive or semi-passive, freeing up time for travel, family, or side hustles—all key to an early retirement lifestyle.

Start investing with REI Nation, where you invest and we handle the rest!