How I Bought My First Out of State Rental Property (And Why It Took Two Wake-Up Calls to Get There)
I never set out to be a landlord. Honestly, the whole idea came and went so many times before it actually happened that by the time I finally closed on my first out of state rental property, I almost couldn’t believe it was real. Here’s how it actually went down.
The Idea That Planted the Seed
Right out of college, I had a coworker who was 23 years old and already renting out a condo. She wasn’t even living in it. She was staying with her mom and collecting rent every month while her tenant basically paid her mortgage. I remember thinking that was the smartest thing I had ever heard.
So I got curious. I started looking into it. And then reality hit fast.
I lived too far from my parents to pull off the “stay home and rent it out” move. I didn’t have anywhere close to a down payment saved. And on top of all that, I kept hearing horror stories about landlords dealing with nightmare tenants, destroyed properties, and middle-of-the-night calls about broken pipes. The dream of owning a rental felt exciting for about five minutes before it felt completely out of reach.
So I shelved it. Focused on saving. Worked toward buying my own place first because paying rent forever wasn’t something I wanted to do either. Got my first home at 25 and moved on. The rental idea faded into the background like a lot of big ideas do when life gets busy.
The Second Wake-Up Call
Fast forward a few years. My boss at work had rental properties. Some of the other executives did too. At some point, my boss turned to me and said I should look into it.
That old spark came back immediately, followed immediately by the same old doubt. We were living in a high cost of living area. There was no way I could afford an investment property here. The numbers just didn’t work.
But then he mentioned something that changed everything: a property management company.
He explained that for roughly 10 to 15 percent of the monthly rent, a property management company handles everything. Finding tenants, collecting rent, coordinating repairs, fielding the calls. All of it. The thing I was most afraid of, dealing with difficult tenants directly, basically disappears. And sometimes there are no problems at all.
That reframed the whole thing for me. Because my fear was never really about money. It was about being responsible for a property and a tenant from a distance with no idea what I was doing. A property management company solved that problem completely.
Why Out of State Rental Property Made Sense for Me
Once property management was on the table, out of state rental property suddenly became a real option worth exploring. If someone else was handling the day to day, it didn’t matter that I wasn’t down the street from it.
I started researching different states and cities, looking for markets that were growing, where prices were still accessible, and where the rent-to-purchase ratio actually made sense. Local real estate in my area was out of the question, but an out of state rental property in the right market? That was a different story. I landed on a market that checked those boxes and started digging in.
The next question was what type of property to buy. I looked into turnkey rentals, where a company buys, renovates, and sells you a move-in-ready investment. But the more I researched, the more I realized that with turnkey you are paying a premium for that convenience. The contractor, the flipper, everyone in that chain is making money before it ever gets to you. I decided a regular property in good enough condition was the better play.
How I Found and Bought a Property From Hundreds of Miles Away
Here’s the part people always ask about when I tell them I own an out of state rental property: how do you even find one when you’re not there?
I found a property management company in that market before I even had a property. I spent weeks researching, reading reviews, and interviewing companies on my lunch breaks and before work. When I found one I trusted, I worked with them to start looking at properties.
Their agent sent videos. I reviewed everything remotely. When we found one we wanted to put an offer on and that offer got accepted, I flew out to see it in person before fully committing. Just to make sure the place looked like what I thought it did from the videos.
It did. Actually, it looked better in person than it did on screen. Lighting in video walkthroughs does a lot of things, and one of them is make good properties look rough. Seeing it with my own eyes gave me a lot of peace of mind.
The property was listed at $100,000 and sold as-is, which is part of why we got it below the market rate for that area, where comparable homes were going for around $120,000. The as-is price reflected the work it needed, and we knew that going in.
The Numbers That Made It Work
Here’s what the full picture looked like on this out of state rental property:
The purchase:
- Purchase price: $100,000
- Down payment: $20,000 (20%)
- Closing costs: $3,000
- Total out of pocket to close: $23,000
- Loan amount: $80,000 at just under 5% on a 30-year fixed
Monthly costs:
- Mortgage payment: ~$423
- Property tax: ~$167
- Landlord insurance: ~$55
- Property management fee (10%): ~$110
- Total monthly costs: ~$755
Monthly rent: $1,100
Monthly spread: approximately $345
That $345 isn’t life-changing on its own. But it covers all the costs, it builds equity every month, and it leaves a cushion for when repairs come up. That was the goal, not a huge cash flow number, just a property that pays for itself and then some.
One thing worth mentioning: I intentionally did not put more down than required. With the interest rate where it was, I figured the extra cash would work harder invested somewhere else. Keep the loan, keep the capital moving.
The Repairs and the Turnaround
Because the house was sold as-is, there was a list of work that needed to happen right after closing. One thing I’ll say about going the out of state rental property route with a good property management company: I never had to manage a single vendor call. They coordinated everything, got workers in quickly, and handled the whole process without me having to do anything from across the country. Total repairs came to around $10,000.
Within one month of closing, the property was rent-ready and the first tenant was in.
One month. That still surprises me when I think about it.
Where the Money Actually Came From
Here is the part I love telling because it still surprises me when I think about it.
The $23,000 that funded this entire out of state rental property came from my ESPP, my Employee Stock Purchase Plan through work. An ESPP lets you buy company stock at a discount through payroll deductions, usually around 10 to 15 percent below market price. For one year, a small amount had been quietly coming out of my paycheck every month going into this account. Honestly, I had almost forgotten about it. It just accumulated in the background while I went about my life.
When I finally sold those shares, I had $22,000 sitting there ready to deploy. Money I had barely noticed saving became the down payment and closing costs on an out of state rental property that now generates income every month.
I became a landlord at 28 using money I had almost forgotten I was building.
Is It Worth It?
I want to be honest here because I think the landlord highlight reel online skips over a lot.
There are months when repairs and tenant turnover cost so much that instead of the out of state rental property generating income, we end up putting money into it. There are issues that come up that even a great property management company can’t fully handle without your involvement. It is not completely passive. Anyone who tells you otherwise has either been very lucky or hasn’t owned rentals very long.
But here’s what I also know: we picked up a second rental the following year. We kept investing in our brokerage too, so it wasn’t an all-in-on-real-estate situation. Rentals are one stream among several, and that’s exactly how I think about them.
The dream that a 23-year-old coworker planted in my head, the one I shelved for years because it felt impossible, turned out to be something I could actually do. It just took the right market, the right team, a funding source I almost overlooked, and finally understanding that out of state rental property investing doesn’t have to be as scary as it sounds.
Sometimes the things you write off come back around when you’re actually ready for them.
Have you ever thought about getting into rental properties but talked yourself out of it? I’d love to know what’s been holding you back.
P.S. Check out other posts on Rental Properties. Also check out Rental Property Expenses for First-Time Landlords
