What's Geoarbitrage and Why are People Talking About It?

My wife and I moved our family from Washington to Texas for the specific purpose of moving from a high cost of living (HCOL) area to a low cost of living (LCOL) area while retaining a level of income higher than what’s available in our local area. We performed geoarbitrage.

The purpose of geoarbitrage is to take advantage of the disparity between income and the cost of living. Choosing to live in a low cost of living area and working for a company that provides an above-average income for your local area is the basis of geoarbitrage

Keep reading to learn how you can take advantage of geoarbitrage opportunities.

A picture of a map showing that I live in Texas and work for a company in California.

A picture of a map showing that I live in Texas and work for a company in California.

Why do people geoarbitrage?

We live in a connected world in which people perform much of their work while sitting at a computer. Companies are starting to realize the benefit of a remote workforce and employees are recognizing the benefit of living in a lower cost of living area and earning an above-average income.

5 key benefits to geoarbitrage

  1. More job opportunities via remote working

  2. A potential higher level of income (earn more)

  3. Lower cost of living (spend less)

  4. Ability to evaluate residency based on factors other than income

  5. Freedom to travel while working

Geoarbitrage to take advantage of different housing market opportunities

We purchased a 3,400 square ft home in Texas for half of the cost it would have been in Washington. This allowed us to size up and buy a house in one of the fastest-growing areas in the country. Not only did we improve our income by moving, but we’re also expecting strong real estate appreciation as well.

Geoarbitrage to avoid high state income taxes

I currently live in Texas, but work for a company in California. This works out well for me because they pay their employees much better than the employers in my local area. I’m also able to avoid California’s high state income tax, which is part of the reason why they pay their employees so much.

6 reasons we chose to geoarbitrage

  1. Relatively low cost of living

  2. Year-round warm weather

  3. Greater access to jobs

  4. Proximity to a warm ocean

  5. A new adventure for the family

  6. Centrally located for travel

How you can take advantage of geoarbitrage

Geoarbitrage is no longer reserved for computer programmers working from a sandy beach. The cat is officially out of the bag. The only question is, how can you take advantage of geoarbitrage to increase your income, decrease your expenses and achieve financial independence?

Find remote work outside of your local area, or move

Geoarbitrage is simple, you can stay where you’re at and find work outside of your local area willing to pay you more money, move to a low cost of living area and retain your current job remotely, or move and find a remote job (like me!). It helps if you want to move for reasons other than money.

Have you considered working remotely?

A major component of geoarbitrage is the ability to work remotely. Are you able to, or have you ever worked remotely? Unless you work on a computer most of the time, most jobs simply aren’t fit for remote working. This is why you commonly see computer programmers working remotely.

If you believe you’re capable of remote work, consult with your manager to see if this is something they would consider. If it means retaining your talent, then they might be open to the idea. As long as you’re not an under-performer.

Top Industries for Remote Work:

  • Information Technology

  • Software Sales

  • Account Management

  • Project Management

  • Customer Service

  • Healthcare

  • Consulting

  • Marketing

Considerations to make prior to choosing to geoarbitrage

Choosing to move our family across the country was one of the biggest decisions we will ever make and we didn’t make it lightly. We planned this move out for over 3 years prior to making our final decision. We considered every possible aspect prior to moving.

Consider the cost of living before deciding to move

There are many attributes that make up a city. The most important for simply looking at income and savings potential is the cost of living.

7 Cost of living attributes to consider:

  1. Housing market

  2. Job market

  3. Taxes (state, local & sales)

  4. Childcare

  5. Education

  6. Higher education

  7. Commute times/traffic

Consider these key areas before deciding to move

There are many other attributes than just the cost of living that make up a city. These are where I believe satisfaction and long-term happiness stem from.

Attributes to consider:

  • Weather

  • Population/density

  • Quality of life

  • Crime rate

  • Types and costs of housing

  • Culture

  • Demographics

  • Activities

  • Travel in/out ability

  • Residency requirements

  • Political environment

Summary

Geographic arbitrage is a tool in your tool belt when it comes to increasing your income and decreasing your expenses and you don’t have to move to take advantage of it.

If you like where you live, and it’s affordable, try to find remote work outside your job market. If you like your job, but want to move to a cheaper cost of living region, then move your family.

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