Remote Real Estate Investing
Chris Clothier began building his rental portfolio in 2003 as a successful entrepreneur looking to diversify his investments. He quickly gravitated toward passive investing, establishing a portfolio of over 50 single family homes in Memphis, Tenn. As an original client of his family firm Memphis Invest (now REI Nation), Chris experienced firsthand what a passive investor endures when purchasing out of state. In 2007, Chris moved his company and family back to Tennessee, wound down his brokering company, and joined REI Nation as a partner and director of sales and marketing.
Since joining REI Nation, the business has grown into the premier turnkey investment company in the country and a standard bearer for best practices in the industry, managing over 6,000 investment properties for 2,000 passive clients. In addition to managing the development and implementation of sales and marketing processes, Chris serves as an ambassador for the company, working with the team to help potential investors define their purpose for investing in real estate and educating peer companies on best practices.
REI Nation clients portfolios hold a value of close to $800 million in single family assets in seven cities. The company has been featured as a six straight year honoree in Inc. magazine list of the 500/5,000 Growing Companies in America. 2019, Chris team assisted 600 investors with purchasing just under 1,000 fully renovated and occupied turnkey homes. Chris led the re brand of his family company on January 1, 2020, from Memphis Invest to REI Nation.
Chris is also an experienced real estate speaker and addresses small and large audiences of real estate investors and business professionals nationwide several times each year, including IMN single family conferences, the PM Grow property management conference, and the Ignite conference in Las Vegas each December.
Chris continues to hold a sizable single family rental portfolio in both Tennessee and Texas. Along with his family, he owns hermes constance messenger bag replica real leather
several commercial buildings in the greater Memphis area.
When not working with the team at REI Nation, Chris is busy raising five kids, operating a racing company in Memphis, and serving as CEO for The Cancer Kickers Soccer Club, a Memphis based 501c3 providing comfort and care for kids battling childhood cancers.
Founded in 2017 by Chris and Michelle Clothier, the non profit organization focuses on providing a team environment for kids to find encouragement and strength in their battle. The company worked with over 500 children from six countries in 2019.
Chris has been featured in stories published in Money Magazine, The New York Times, The Wall Street Journal, and DN News, as well as the Memphis Business Journal. In 2018, McGraw Hill Publishing purchased Chris manuscript, The Turnkey Revolution, and worked with Chris to publish his first book in May 2018. Chris has also published articles on the BiggerPockets Blog since 2009.
There are many debates in the world of real estate investment. Multifamily versus single family. Residential versus commercial. Flip versus buy and hold. Of course, one of the most enduring and contentious debates in the industry is that of local versus remote real estate investing.
You might be surprised to learn that a majority of real estate investors are, in fact, out of state investors. With the advent of the internet and investors ability to see and buy property anywhere, out of state investing has grown in popularity.
Conventional wisdom may say to invest where you are, presumably so you can better control outcomes. Modern sensibilities, however, tell us that investing beyond our local markets can be more beneficial to the health of a buy and hold real estate portfolio.
Two main reasons to invest out of stateThe number one advantage to out of state real estate investing is portfolio diversification, pure and simple. Diversification happens on two distinct levels: how many properties you have and where those properties are. Owning more than one investment property helps you manage the risks that come from vacancies or individual property expenses. Multiple investments can sustain your returns in the meantime. On a higher level, buying across multiple neighborhoods and markets continues to hedge against risk.
The economic factors that shape each market will shift and vary. Demand will ebb and flow. Natural disasters are a possibility. When you own properties in various markets, you can avoid taking a hit to your whole portfolio because of one hurricane, one legislative move, or one economic downturn. The United States is vast and varied. You’ll find that your dollar will go much farther in a southern suburban market than in an urban coastal hub. If you invest in, say, Alabama, rather than in San Francisco, you’ll find yourself able to afford five properties for the cost of one.
Being able to more quickly scale your portfolio means more diversification, less risk, and a better rate of return. Your price to rent ratios will look a lot better in more affordable markets.
Of course, investing out of state is more complicated than that. Despite the clear advantages, investors can make a big mistake going into the wrong markets unprepared.
5 key qualities in an out of state marketRelative affordability is something we’ve already talked about in terms of advantages. However, it’s also a quality to look for. Investing out of state isn’t enough the numbers have to check out. The biggest danger here is falling prey to the lure of “hot” markets. Prices will push up, hurting your price to rent ratio and, ultimately, your cash flow potential.
This is why it’s important to pay attention to a market’s performance in terms of list prices versus sales prices. It’s why appraisals and inspections matter. For the real estate investor, you want to capitalize on the relative affordability offered by an out of state market. If you only target “hot” markets often those with rapidly growing property values you run the risk of a future crash.
Beware of overpaying, even if the market is, on the surface, more affordable than your local market. You still want to ensure that you’re paying for quality and a solid long term investment, not just hype.
When considering relative affordability, consider the relationship between supply and demand, the potential for housing bubbles, and what you getting for your money.
2. Long term stability
No one said buy and hold investing was exciting. Rewarding, yes. Thrilling? Not necessarily. When investing out of state, more stable markets are where you want to put your money. While the fast and furious environment in a highly competitive market is exciting, you’ll likely end up overpaying not to mention the desire to “win” may cloud your judgment.
Stability is the key here. While you want to target markets that see an upward trajectory in their performance (which we’ll cover momentarily), they don’t have to be among the fastest growing, hottest markets in the nation to make for a solid investment. Ideally, your out of state market will provide you with appreciating property values, increasing rental demand, low vacancy rates, and long term residents.