Out of State Investing - How best to avoid analysis paralysis?

35 Replies

Give yourself a deadline, but also a peanilty if that deadline is missed.

There will always be deals, some better or worse than others.... But the point is there's always something. If you always wait for something perfect with out understanding your evaluation criteria it'll never happen.

Fine tune your numbers, your selection criteria, and your attack plan. Once you have that go nuts lol.

Originally posted by @Chris Gordon :

@Robert Ellis what resources do you use for looking-forward projections? I ask because Cincinnati has seen a net negative migration over the past 5 years and population growth of only about .6%.

 I use Marcus and millichaps annual report that goes over each market for multifamily. They do the top 50 markets in the country including Columbus and Cincinnati 

Originally posted by @Billy San Roman :

Aloha Everyone thanks in advance for reading. I have decided to move forward with my interest in REI and want to explore out of state options. The first logical step for me was to analyze markets and then choose one before networking and building a team in that area. I very quickly found myself with multiple articles on different markets with more stats then I could imagine. Recently I found some great sources and am now printing Comprehensive Housing Market Analysis's for each area I would like to explore. Still, I find myself with an enormous amount of information and not quite sure what data would be best to influence my decisions.

My question: Whether or not you invest out of state or have experience with market analysis, what are the top factors that you look for to influence your decision? Any advice or insight that you can share regarding this would be greatly appreciated as I can see myself going down a rabbit hole analyzing markets until the end of time without some additional insight from experienced investors as to what is most important to look for and then go from there. 

Mahalo for your reply!

It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
Originally posted by @Robert Ellis :
Originally posted by @Chris Gordon:

@Robert Ellis what resources do you use for looking-forward projections? I ask because Cincinnati has seen a net negative migration over the past 5 years and population growth of only about .6%.

 I use Marcus and millichaps annual report that goes over each market for multifamily. They do the top 50 markets in the country including Columbus and Cincinnati 

Thanks again Robert, Columbus seems to have some positive population growth trends what is it that you find attractive in cinci?

@Billy San Roman when I look at markets and neighborhoods, one of the most important factors in a "hot" market, in my opinion, is the affordability for the tenants. If tenants are paying less than 30% or their income in rent, then it is affordable, if they are paying 40% or more, then it is not. When a down turn happens, the less affordable markets are the first to go and have the farthest to drop. Next I look at opportunity to find value add deals, job growth and type of job growth, population growth and the trend of the population growth, city involvement and new buildings going up vs population coming in. 

This article further breaks it down: https://www.biggerpockets.com/blogs/10145/66160-ho...

I also had analysis paralysis.  I went with a turnkey for my first deal, and loved having someone "hold my hand".  I consciously traded a bit of return for the help and security.  I see it as a learning process.  You learn so much faster when you have your own money on the line and live with it day to day.  

Originally posted by @Tim Cronin :

I also had analysis paralysis.  I went with a turnkey for my first deal, and loved having someone "hold my hand".  I consciously traded a bit of return for the help and security.  I see it as a learning process.  You learn so much faster when you have your own money on the line and live with it day to day.  

 Well said. Turnkey is a service. I consciously pay more for my steak at the restaurant then I do at the grocery store. Same thing here.