Stop Paying the Out-of-Town Tax

You're getting ripped off

Aug 14, 2025

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Everybody’s familiar with income tax, short-term and long-term capital gains tax.

But only us real estate investors know about “out-of-town tax”.

It’s the hidden premium we pay for not being local.

And it comes in a few different shapes and sizes. . .

Such As

I’ve had brokers and wholesalers try to inflate the price on deals simply because they know that I’m from California, and they presume that all of us West Coasters are flooded with cash (absolutely not the case).

I’ve had contractors up-charge me because they know that it’s cheaper to pay them than it is for me to fly across the country and do it myself.

And the most common way that we get hit with the out-of-town tax happens like this:

We hire the cheapest, quickest, contractor we can find because we desperately need the issue resolved.
Their rate is half the cost of the name-brand contractor, but the work ends up being shabby.
And ultimately we have to hire another crew; costing us double the money and taking 2X as long.

However the out-of-town tax makes it to your bottom line, it all hurts the same.

But contrary to that powerless feeling you get when you have to cough up an extra $2,000 to rectify a $500 fix, you don’t have to take these costly bumps and bruises on the chin.

You Can Fight Back

I’ve been investing in real estate for years and the vast majority of my properties are spread across the Midwest and East Coast.

I learned about the out-of-town tax the hard way—it was an expensive tuition.

But over time, I learned how to evade Uncle Sam (the out-of-town tax).

I boiled it down to these 5 simple frameworks.

They’re not impenetrable; you’re bound to pay a bit extra out of pocket every once in a while; it comes with the territory.

But they’ve undoubtedly kept my capex (capital expenditures) in check.

And they will do this same for you.

Framework #1

Know Your Numbers Before You Start Counting Cash

Without a basic grasp of construction and repair costs, you’re going to get ripped off on a regular basis.

Contractors will take your lunch money like clock work.

Whether it’s through books, blogs, Chat GPT, or good old-fashioned Google searches, do your homework ahead of time.

Gaining a loose understanding of what the job entails and how much it typically costs, will help you establish guardrails before gathering bids.

Framework #2

Handyman or Licensed Pro? Pick One

All jobs aren’t created equally.

Unclogging a toilet doesn’t require the skilled training - nor $300 an hour price tag - of a licensed plumber.

On the flip side, I wouldn’t hire a handyman to repair my sewer lateral.

Developing a knack for which jobs are cut out for licensed tradesman, versus which ones can be outsourced to the average Thumbtack handyman will save you thousands of dollars and millions of headaches.

Framework #3

Never Hesitate To Use Your Lifeline or Phone A Friend

Some investors are scared to ask for help— i’m not one of them.

After I’ve done my own independent research, I’ll look to other investors for referrals.

Our community is smaller than you think.

If there’s a carpenter that does great work in your market, chances are, their name will come up.

And the same goes for the bad actors.

When con-tractors slither through town snaking people out of their money, word travels just as fast.

Fellow property owners will be the first to tell you who they’d recommend working with versus who you should watch out for.

Framework #4

There’s No Such Thing As One and Done

Gathering bids is a chore that no investor enjoys.

But in the same vein, all of us love the feeling of getting a good deal.

It runs in our blood.

So although you dislike sifting through Google Business Profiles and sitting on the phone with contractors’ admins, you have to do it.

It’s the only way to ensure you’re getting a fair shake on the work that you need done.

Compiling multiple estimates will reveal one of two things: (A) The first quote you got was way over priced, or (B) It was too cheap to be true.

Both insights are equally valuable and will lead you to the true cost of the project.

Framework #5

If Financing Wasn’t An Option, Would I Pay This Price In Cash?

Putting $10K on a credit card or stretching it into tiny payments across 5 years, doesn’t hurt as much as digging into your pocket and handing it over in cold hard cash.

But you have to treat them the same.

That $10K project will turn into a $15K line item when you tack on interest and fees.

So whether financing is an option or not, you must be an equally fierce negotiator.

If you don’t, you’ll become numb to the pain of breaking the bank.

Part of being a remote investor is recognizing that the same rules don’t apply to us.

The local contractors, brokers, movers and shakers do things their own way.

And if you let them, they’ll walk all over you; making you pay the out-of-town tax every time you pass go.

It’s up to us to know the game inside and out.

It won’t happen over night, but these frameworks will surely speed up your learning curve.

Even if you don’t immediately put them to use—which I wouldn’t recommend—hang on to these guiding principles.

When you finally become fed up with getting over charged and ripped off, they’ll come in handy.

What’s your take on today’s topic? Do you agree, disagree, or is there something I missed?