Whenever you invest in an area away from yours, you MUST, MUST, MUST hop on a plane or jump in the car and go have a look and meet people. You're placing a bunch of trust in people in the place you're investing, so you MUST get to know them personally.
You must be very careful not to evaluate property in a different location with your local eyes. If you live in the bay area, and look at a house for $2000 in Detriot, you may think "wow, its a steal". And someone might be able to send you great pictures. But if you go there in person you may discover every house on the block is empty or inhabited by squaters. Taxes are high, and there are too many houses for the current population. Many houses have back taxes that will have to be paid by the new owner. Folks here sometimes label houses NFF - not for free.
When you're at a distance, every little thing becomes a big expense. Once of my tenants called about a month ago and said there was water dripping under the sink. I went over and the flex hose to the sprayer was loose. It was loose because the top of the faucet had broken. I told them, you broke it, you'll have to pay for a new one. OK, they said, and I took it to Home Depot. I noticed the new one (identical faucet) was much more heavily built than the old one. And the box said "limited lifetime warranty". Woo Hoo, HD exchanged it for free. So, it was two hours of my time but nothing out of pocket for me or the tenant. Tenant's happy, I'm happy.
Now, not everyone's willing to do that sort of thing. Some will argue you should use the time to do more deals. Probably the best use I'd have made of that time was reading BiggerPockets. More likely I'd have sat on the couch and watched TV. But by having my rentals nearby I at least have the option of doing the work myself. Had I paid someone, it would have been, what, $100 for a plumber who would have bought a new faucet and charged me for it, too?
I'd strongly encourage you to at least have an in-person look at where you're going to invest. If possible, find something closer. Even if its not the bargain basement prices that appear to be in Detroit. Personally, I've thought long and hard and even being in Denver, I can't convince myself to buy something in KC.
Tags:
