First deal out of state

8 Replies

Hey everyone!
I was presented a deal for a triplex in Alabama, close to Alabama state. I live in Southern California so you can see the dilemma already.
The property is 100% occupied with two units renting at $600 and one at $585, each with 2 bed one bath.
The property is priced at $119,000 with over 4000 square feet, it is currently managed professionally. The owner is just looking to get a bigger property.

Any thoughts?

Suggest getting a list of suggested repairs, proof of payment from the tenants and a copy of the lease to ensure you agree with the terms, and possibly some references for the property manager. 

On paper, it exceeds the 1% rule, so looks like a good deal :) 

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Aside from the normal inspections (wood infestation, foundation, roof, etc) I also like to look at comparable rents in as small of a radius to be statistically significant to ensure when these tenants move out you'll be able to get about the same if not more rent. 

Alabama is a buyer beware state, so make sure you've done your due diligence.

I agree with Christy. Owning property out of state has its own pitfalls. I own one in Florida. out of site out of mind kind of style. check the rent comps in the area, also check for any zoning changes recently, inspection is worth the money for any purchase, validate the property management and contracts. verify what this rental needs (repairs).

Christy Harris

Christy Harris

Hey @Daniel Cuevas good job on the deal out of state. There are a couple things I would ask for...

I would ask for:

-utilities bills

-see if each unit has it’s own utilities (which makes the property a true triplex if they do)

-see what repairs have been done in the past couple of years

-get an inspection done on the property 

-see what the properties rental comps in the area and see with some rehab work if you can raise the rent once the work is done, or even raising the rent right away.

-gather all other expenses and see what other landlords in the area are charging the tenants to pay for (i.e. waste, water, electricity, gas)? Those will determine your expenses and what you can factor into the rental for expenses-gross income = net income.

@Christy Harris thank you very much for the advice, it was extremely helpful. 

@Jonathan Yungel never thought of checking zoning changes.

@Peter Mckernan Thank you so much for the break down, I will definitely be referencing this information in the future.

@Phil Earley definitely will do that.

Unfortunately I haven't heard back from the owner and it doesn't look like it will be a deal I will be pursuing.