I'm a landlord, but the house that we're renting out is only a block from our residence. Personally, I wouldn't want to own a rental that's far away because I need to keep an eye on things and personally interact with our tenants to feel secure in my investment. If you have a different personality, however, an out of state rental might be a possibility. You need to find a local manager or management company to deal with repairs, find tenants, whatever.
As far as tax advantages . . . they're pretty good. Gennerally speaking (I'm not an accountant, speak with your tax advisor, blah, blah, blah) you can deduct: Interest paid, points paid, management expenses, advertising expenses, repair expenses, tax expenses, insurance expenses, and . . .here's the biggie . . .depreciation. Now, you have to recapture the depreciation when/if you sell, but in the short term it's a good deal. You can also avoid some appreciation/capital gains issues if you roll the money into another investment property or move into it. (live in a house 2 of last 5 years = lots of excluded capital gains).
Happy researching!
