I’ve been hearing that question for some time now from many parts of the country. Let’s step back and look at the big picture. You have more options than you may believe.

I’m based in San Diego where the real estate market is worse than some and better than others. But nobody would say it’s currently a good market. I have many investors from here who have invested not only out of town, but out of state. Some have acquired properties in two states. Why?

Since your capital doesn’t know where it’s invested, you can go anywhere you like. There’s literally no strong argument for staying local just to be local. There’s nothing magical in being able to drive by your property. It might give you the warm and fuzzies, but if your area is terrible, your choices are limited.

You can either invest somewhere else, or not invest while you wait for your town’s market to recover.

In San Diego, that’s never going to happen. Don’t get me wrong — our market will regain its equilibrium. But in the next 5-10 years what investor in their right minds is going to pay $750,000 for a 40 year old duplex in a nice, but blue collar area of town? Not my clients, that’s for sure.

So exactly what are your options?

First understand there are growth regions out there. Don’t believe everything you read, see, or hear in the media. Bad news sells newspapers, and air time.

You can readily access areas offering very well located affordable investment properties, just waiting for your capital. People just like you have come to my office from San Diego, and after hearing about the Phoenix area, ended up investing in 2-6 properties there. The same thing is now happening in pockets all over the country. Austin, Ogden, Salt Lake City, Boise, Denver, and I could go on.

Should you let your local depressed market delay your investment agenda? No way.

So what should you do? (You mean besides call a very knowledgeable real estate investment advisor Jeff?) J

Before you even think about making any offers anywhere you need to have your property management in hand. This sounds easy, but trust me, most of them aren’t worth the time it takes to pull out of their parking lot. If you’re investing in another region, property management will be your best friend – or your worst nightmare. Make your choice wisely.

And finally, what’s the best part of investing in a far off city? You can’t drive by. You don’t get those 2 A.M. phone calls complaining about the stove’s pilot light. You’re not cleaning a newly vacated rental in preparation for a new tenant. Instead, you go to the movies or enjoy reading about how much your investments are appreciating in value. Investing out of town needn’t be difficult, but it does require you to be purposeful at every turn.

Should you wait until your town bounces back? You should if you can afford to tread the financial waters without hindering your retirement. Most people don’t have the luxury of wasting several years while their investment capital stagnates.

Make the move.

Liz, Let’s assume we know exactly where you are now financially. Let’s further assume you have about $125K in cash to invest.

The first thing we do is decide how much should be allotted to cash reserves, or what I’ve already referred to as your Sominex account. In this case I’ll feel very comfortable if you retain around $40K. This will result in excellent sleep even though you had to buy that $700 refrigerator for unit #2. J

Before we get all excited and start making offers, we’ll head over to the lender to get you pre-qualified for the loans you’ll be getting. This will result in a letter from the lender saying you’re a solid citizen, and that yes, they’ll loan you the money for the property on which you’ve made an offer. This allows you to look very strong as a buyer from the seller’s viewpoint.

We’ve decided that since you need to grow your capital, Boise is a very good fit. You can find homes in great areas in the price range of $175-240K. The area is a job magnet, unemployment is below the nation’s average, and people are moving there in droves. In short, we like the region very much. Now all we have to do is start our search for appropriate properties.

While we’re doing that you have the option of flying to Boise or not. Most investors either never go to the far away city in which they invest, or wait until they’ve closed all their purchases. We recommend the latter. Since as professionals we already know the area well, plus have the valuable backup of the local pros, a trip to Boise before buying will only serve to make you feel better, not really accomplish much. We’ll arrange for our team to give you a very comprehensive tour of the region, take you to lunch for a one on one question & answer session, then take you wherever you need to go. We’ve even had clients land in the late morning and leave at night to go back home.

Whether you go there or not, you’ll be introduced to everybody on our team — agents, inspectors, and most importantly the property manager. You’ll know them by first name before the process is finished.

We’ve arrived at the good part now. We’ve found three homes priced to fit your budget. The offers are structured to your financing requirements, and plainly spell out who pays for what, when certain things must be done, (deadlines) says how much you’re putting down, and the rest of the details involved in buying real estate. One thing we insist on is a home warranty, which comes in very handy when a heater breaks down. Most of the time we’re able to get the seller to pay for the first year.

So now we’re in escrow on three Boise houses. We’ve done the numbers backwards and forwards, and it appears it will cost you a total of about $82.5K to close them. Since they’re set up to close in 30 days, we quickly order the appraisals and the professional property inspections. We have our managers also attend the inspections with an eye towards potential tenant objections. The inspector might not care about the neon orange shag carpeting, but the manager doesn’t want to try to explain to a potential tenant why orange shag is in these days. J

When we get the inspection report back we go over it with a fine tooth comb, then list the repairs we want the seller to make at their expense, before escrow closes. The seller then agrees. But we don’t just accept that. Before the closing date we send the same inspector to the properties to ensure all the repairs were made, and made professionally. (This second inspection is also attended by our manager.)

The only thing left is loan approval, loan document signing, and closing. Sounds simple doesn’t it? Actually those three things should be very simple. In real life Murphy sometimes finds a way to entertain himself at your expense. Let’s say your escrows are smooth as silk, as most are. The loan approval comes in, which triggers the drawing of the loan docs. Once drawn, they’re usually sent to the title company/escrow who then packs it off to wherever you are going to physically sign them. (For instance, in San Diego my mom would take them to your house so you wouldn’t be inconvenienced.) J

The signed loan docs are then shipped back to escrow. Escrow then crafts a HUD-1 statement, better known as a closing statement. This will detail where every last penny went for both the buyer and the seller. Some things like rent, interest, and HOA fees will be prorated between the buyer and seller as of the closing date.

The next day your escrow closes. The escrow sends the deed to the title company for recording at the county recorder’s office. You now own three well-located Boise homes. You’ll receive an envelop from the escrow company by mail containing all the documents for your records. Since their estimated closing amount is usually over-stated, you may also receive a check for unused funds.

All you have to do now is find a nice family who wants to rent your new places, and help make your retirement what you’ve always wanted it to be.