Out of state real estate investing - good idea or not?

Question

I live in Phoenix, which according to CNN/Money List is a 41.9% overvalued market.

http://money.cnn.com/2006/03/13/real_estate/overvalued_housing_markets/

But looking at the list, I see there are many areas (like Dallas, TX) which are still quite undervalued. I figure it would be a good investment to buy property in those areas. I can get a 10% CAP Rate investing in Texas, which is a great rate and makes me think I can't go wrong. (I could never find that kind of return in Phoenix or California).

So my question: do you think investing in out of state real estate, in "undervalued" areas is a good idea? Or should I avoid real estate altogether since we are entering an uncertain market?

If there are any experienced investors out there, please chime in with your thoughts. Thanks!

Answer 1

Short Answer: Yes. Good Idea.

Talk to various local Brokers/Agents, preferably one who specializes in investment property. Look at appreciation rates for the last 1, 5, 10 and 20 years, look at the average vacancy rate, analyze the submarket yourself. Talk to local property management companies, as you'll likely need to have this property professionally managed. Add in all the costs, if you can cover most of the costs from rent and have enough cash reserve, consider the investment.

As for the 'uncertain' market: Yes, the future is uncertain for the very short term. On the other hand, RE is a GREAT long term investment, so don't sweat the small stuff.

Answer 2

RE is always a good investment provided there is minimal negative cash flow. In other words if your rental income on the investment just covers the mortgage and property taxes than it's a good deal otherwise stear clear. Regardless of tax benefits money out of pocket is money out of pocket. Also don't get fancy thinking I can milk it for a few years by using 0 down and an ARM cause you'll end up loosing $$$.

Answer 3

get free real estate!

http://search.ebay.com/_W0QQfgtpZ1QQfrppZ25QQsassZchavat123