My out of state investing plan
Hi,
Any thoughts on my investing plan are appreciated:
--Invest out of area in a low COL area. Try to meet the 2% rent rule (or better). I'm thinking Cleveland at the moment. Target 3 bed 2 baths in working class neighborhoods. Test out direct mail against potential MLS deals. Send a regular newsletter to RE agents to stay top of mind.
--Pre purchase: Run a potential deal on spotcrime.com and call the local PD to get a sense of crime in the area. Avoid areas with drugs/gangs/violence. Run the numbers. Don't buy for appreciation, buy for cash flow in lower headache areas. Get a full inspection done with pictures. If everything looks good, buy sight unseen.
-- Post purchase: Hand off the house to a PM after vetting several. Plan to switch to a good PM as necessary. Augment his efforts with online advertising of my own (to fill vacancies). Manage the manager and keep watch over all expense items.
Seems pretty straightforward to me. I know PMs will be a trial and error process, I'm committed to working through it. Are there any other major headaches I should seriously consider before pulling the trigger on my out of area plan?
Thanks!
Most Popular Reply
Gary,
A "headache" you might have missed is rehabbing. Who will do the work? That can turn into a major headache, if you don't have solid referrals for a contractor to do the work. I offer properties to investors and the biggest challenge I had, by far, was finding a good contractor. It wasn't finding properties or buyers, it was finding fair and honest contractors! So be careful and I wish you the best of luck. However, you're spot on about a PM. You can purchase an incredible deal that rents for a nice sum. But if your PM sticks bad tenants in the property, everything else means nothing. Best of luck to you.