If you're looking to buy a property out of state, site unseen.. how would you best approach this? Other than not physically being able to see the property and check up on it yourself, is there really that much of a difference than investing locally?
@Tre Irvin I think the short answer is yes... especially during the purchase phase when you typically would do due diligence. A local property under good property management and a long distance property under good property management might be very similar - but buying something "site unseen" is very risky. Is there a specific deal you're looking at?
You'll definitely need a reliable and trustworthy team on the ground. Have you started to build one?
I suggest the following if you or designate can't physically visit the property...
1. Using Google earth to see the map and street view keeping mind it may be a few years old.
2. Check to see if the local tax assessor. Some have permit info as well as updated satellite photos.
3. Request a local real estate professional do a video walk through.
4. Call the local utilities database on the property.
It really isn't that much of a difference as long as you have a great team on the ground.
1) Use Google Streetview to check out at least 1-2 blocks in all 4 directions around the target property
2) Hire a PMC to do a video of the neighborhood and interior if they can get access. They will have much more focused feedback than a real estate agent - most of whom have little clue what an investor landlord is looking for.
3) Make sure you find & hire your own inspector to avoid conflicts of interest
4) Make sure any purchase agreement has contingencies to receive leases, rent ledgers, rent applications, etc BEFORE the closing.
You might want to read our series about “How to Screen a PMC Better than a Tenant”, since selecting the wrong PMC is usually more harmful than selecting a bad tenant:
@Tre Irvin I think this comes down to trusting your team and or the company you hire. There are companies that provide newly renovated properties, oversee the renovations, get their properties inspected, work with the owners team, and etc. This comes down to true transparency. You would want a company that have done this time after time, this is not their first rodeo, and have the team that are more than willing to communicate throughout the process – so that you (the buyer) are comfortable with your investment. The more information you are provide on the front end . . . the better you can feel as the buyer. Ask for the scope of work, before and after pictures, electrical/mechanical/plumbing/HVAC inspection notices (both rough-in and final), building permits (if needed), etc. If the company is hesitate, not wanting to provide you this information, and you are wanting it – have your team do their due-diligence and find out at the code office. In some cities you can public-ally research some of this information. I hope this was somewhat helpful.
Best of Luck!
I agree to having a good team if you're working with out of state properties. We were about to put an offer in on a property close to the Gulf in Florida (we're in PA) thinking there couldn't be anything wrong with it. After a call from our realtor, then the same feedback from our property manager, THEN I happened to call a local plumber about another property and they all told us about a bad drug problem in the neighborhood. Needless to say we decided not to purchase the property. If you don't yet have any people on the ground where you're looking to purchase you could just call a local business owner or a contractor and ask their opinion on the area, however that wouldn't help with the property itself.
@Nicholas L. Not a specific deal yet. I'm just super interested in out-of-state investing because I'll be moving back to CA soon. I wanted to see what suggestions people had when pursuing that vs. a local property.
Work with licensed and/or insured professionals - always ask for references or examples of work done. Be specific with communication expectations from your boots-on-the-ground team (pictures, notes, updates etc.). Easiest way to get started is by finding an REI realtor in the area then using references and referrals from there to do your own background and assessment. Send a few deals their way and see what information you're getting back and if its adding value or seeming sketch. Also, join your local REI groups on Facebook to get to know other OOS investors in the market and to see what others are up to, or who to avoid.
Best of luck to you!!
@Corby Goade I haven't started to build a team yet because I'm still very early in the process. If you don't mind, do you have a system or any suggestions for how you approach building a team in a different area?
@Nathaniel Walker I'll definitely make a note of these. Thanks man!
@Antoine Martel Any suggestions to make sure you form the best team possible?
@Drew Sygit A lot of great information that I'm sure I would have missed. Thanks for the link, I'll take a look.
@Davartay Miller Very helpful, thanks man!
Thanks @Alora Glaze great information!
@Tre Irvin sure- I might be biased because I'm an investor friendly realtor, but I think that is where you should start. Most realtors who work with investors will already have a team in place. If you build trust and rapport with your realtor, you will be able to leverage their team and become part of the machine.
Best of luck!
I personally would never buy a property “sight unseen” but that’s just me.
To me it’s all about the location! I look at markets I will invest in and then look at exact locations of real deals. If I will invest in a location, then I’ll do due diligence on the property. I see a lot of people doing this backwards. You can’t change the location. You can change the property dramatically in a short amount of time. Location first, property second!