Out-of-State investing help

[William Montgomery]

Hello,

I am in the Seattle are looking into Invest In out of state rental properties. I have been researching Peoria IL, due to its price range (150k and below). I was wondering if anyone has any connections in this area? I would perfer to buy before the end of the year.I own my own home, looking to use the equity from that to start my investment journey. I am looking for suggestions for the following:

- out-of-state Investor friendly Real estate agent.

- Property Management Company.

-Lenders.

- Contractors.

- Neighborhoods/ things to watch out for.

- landlord regulations.

I appreciate any help. Have a great day! Thanks for the help.

[Drew Sygit]

@William Montgomery for many new investors, buying their first rental can be intimidating and there are all sorts of perilous challenges!

What @G. Brian Davis offers is a pretty safe alternative. It allows you to share the risk with other investors and learn from each other. THEN you can decide if you want to invest solo:)

If you do proceed solo, ASSUME EVERYONE IS LYING TO YOU until they prove otherwise! 

I know that sounds a bit crazy, but it will protect you. The honest people won't really mind, but the scammers will keep telling you to trust them until they get tired of your quetioning them and ignore or "fire" you.

Here's some copy & paste advice you may find useful:

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We think the Midwest is a GREAT place for OOS investors to consider!

Your first question shouldn't be WHERE to invest (that is #2 question), but HOW you will invest!

Many OOS investors set themselves up for failure because they don't invest the time to ACTUALLY understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Good luck!