I've been thinking about investing in real estate for some time. It's mostly been on the back burner, but I think it's time to get more active in the community. So, hello, I'm Luke. Nice to meet you all!
I had a question regarding the remoteness of potential investment properties. I live in SF, and I've heard that the rental market around here is notoriously difficult and expensive. Moreover, the laws in SF (perhaps California in general?) seem to be significantly biased toward the tenant. I don't proclaim to be an expert on either of these topics, but this is the general picture I've put together in my head. With this in mind, I'm not sure that SF is the right place for me to start my REI journey.
I've spoken to a friend of a friend who lives in the Bay Area but has actually bought and currently rents multiple properties in Texas. I'm thinking that I should perhaps do something similar? It seems like a strong option, but at the same time it seems super daunting to own properties in another part of the country. In addition, he has the benefit of growing up in that area of Texas, whereas I grew up relatively close to SF. Therefore all other markets are completely foreign to me.
My concerns boil down to the following:
- Is this at all feasible?
- Am I essentially forced to use a property manager?
- How can I properly assess the properties without flying out there to see them myself?
- Do taxes become significantly more complex?
- This is scary.
Thanks for taking the time to read this -- I appreciate any help/advice that anyone might be able to send along.
I would recommend doing this if you have a trusted network or source in that area. Maybe someone who can scope out the property quick for you...
Welcome @Luke Morris
I have read similar posts to yours quite a few times. I believe that the key to successfully investing in real estate in another state or country is not about the stats or demographics of a particular area but rather the group of people established on the ground. This can take time to do but its time well spent IMO.
I have seen and heard of to many horror stories with investors jumping in to soon and getting screwed over by shady operators.
Thanks for reading and have a great day.
In my experience, I have had good luck at purchasing rentals out of state, but not in doing rehabs out of state. I suggest you either have someone you know and trust to manage locally or get a good property manager. I would much prefer to have properties locally to keep an eye on things, but I concur that having local experts that you trust is the next best thing. Good Luck!
Larry Goins is kind of the guru on this type of thing. I think it has potential, but it's always risky doing things like that.
I've bought properties sight unseen, I wouldn't recommend it, but mine were fine as I had an appraiser that I knew personally and trusted, he did the appraisal and later inspected again for me. In a case where you really have someone qualified to assess value and who knows the market, I can see going there, otherwise I'd say someone was nuts.
Top of the 9th, not looking good for the Cards :(
I bought my 4-plex in Phoenix, AZ pretty easily. Although I will admit that I did do a drive buy of the property before buying it. As for everything else:
- I was not present for the inspection or appraisal, but my RE Agent was and she took dozens of pictures. Also the inspector, and the appraiser, and the person doing the termite inspection all took photos as well. Certainly worth what I paid these people
- Every form or document for the RE Agent that I needed to sign I did online with my computer and the rest of the work by phone, I worked with her almost completely by telephone, only seeing her two times, the day I drove up to look at the property, and the day I closed.
- Every form or document for the mortgage provider that I needed to sign I did online with my computer, I never met these people face to face
- I had the seller send me all the financials, the rent rolls, the current leases, the SPDS, etc. via e-mail.
- I worked with the title company once again completely online and by phone, signing forms, and I wired them the earnest money and down payment from the bank less than a mile from my house.
I could have closed the deal remotely, however I was working on a short timeline for the seller, so I had to make the 3.5 hour drive up to Phoenix. While I was in Phoenix, I met with my agent again, met the seller, met my property manager for the first time, and got the deed and keys to the property. All of this could have been done remotely without much effort.
@Luke Morris I suggest that if nothing else, you visit the area where you will be buying first, and you meet with the RE Agent you will be working with before you buy anything. A plane ticket to wherever you are investing, and a couple of days looking at properties and meeting with possible team members will be more than worth it, especially since we are talking about spending tens of thousands of dollars.
You can certainly buy out of state. I recommend you find a property manager you trust implicitly. All of my rentals are about 4 hours from me and my property manager makes them easy to run remotely.
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