Out of State Real Estate

[Michael Vallee]

Curious about proximity to investment. Ive been lured by the prospectus of investing out of state although it goes against most of what I've read any been counseled to do. The "fact" that nearly every direct mail campaign has "absentee owners" as one of the main sources of finding distressed owners as targets is telling. There's seems to be more inherent potential for mismanagement from a distance. Although I have units in both AZ and WA...I'd be curious to hear advocates for both sides of this topic of proximity to investment. I'm currently looking for 5-30unit apt and am vetting my options. Best, Michael Vallee

[Bryan O.]

@Michael Vallee out of state investing and in state investing are 2 different mentalities.  I think that is why you see so many out of state investors fail.

In-state investors learn to vet the ceiling, foundation, windows, floors, kitchen, bathroom, etc. They will typically manage the property/rehab using their own skills and know-how. They are buying a project and an investment.

Out-of-state investors do it differently. They must vet the area, the lead source, the contractors/PM, and the management team. The property itself is the smallest portion of the deal and they use their skills to "manage the managers". They are buying an investment.

In my book, local investors fail because they're doing it wrong. The things you do near you are not the things you do far away.