Out of State Investing - Purchasing Sight Unseen??

21 Replies

Hello, People of BP!

I want to know how those of you who are out of state investors do it. Do you actually travel/drive/fly to do a walkthrough on the property before you make an offer? I feel like that lapse in time could jeopardize a potentially great deal. However, it seems woefully irresponsible to purchase sight unseen. Looking for some advice here. Thanks!

Your eyes on the ground first viewed the property and give you a review. You may then choose to get the property under contract with plenty of escape clauses.  You then hop a plane and proceed with your due diligence.

If you do not have trusted eyes on the ground do not invest out of state.

Trusting the team you have in place which is Typically your real Estate Agent at that stage.
Unfortunately sometimes in very hot market your agent may not have the opportunity to see it so it’s important to be quick.
I have made offers without viewing properties but once I’m in contract I always take a flight to see property before closing date im willing to walk away if I find something I don’t like, so far I haven’t had to do this.

I Look at job growth, population growth, purchase price to rent ratios.
Don’t expect your first deal to hit it out of the park.. Many investors is what they look for and because they never find the killer deal they never end up making a deal.
It took me 2 years and 5th purchase to finally find that great deal. My first off market deal in Charlotte and I’m currently under contract w my first property in Raleigh. Never thought I would be under contract w 2 Properties at same time in 2 different cities.
First thing you need to is identify the market you want to be in and Neighborhood class. If you’re beginning stick with C+ to B+ class neighborhoods. Don’t make the mistake In falling for cheap Purchase price and high returns which you can find in undesirable neighborhoods but they come w a price. I almost made that mistake... With more experience I might consider but not now.

If a few hundred dollars in airfare or a day of your time skews a deal then do not invest out if your area. I say area and not out of state because I live in Texas and a property can be an 8-9 hour drive for me and still be in Texas

There is NO substitute for the eyeball test. I usually never see a property before I have it under contract and typically walk away from $3000-5000 worth of earnest money every year. But in my 28th year, I have never closed on a property that I personally have not seen. I never ever would trust a "team" 

However, putting on my Broker hat, I have rescued several investors that have purchased site unseen. And I mean by rescued is minimize their losses 

There are not to many places that you can't get on a plane in the morning and go see a property and return in the evening. This trip could save you tens of thousands of dollars 

512-293-3885

I never personally look at homes before I purchase them - there's actually one home I own that I've had for almost 2 years and still haven't been inside. There's no need really and you'll miss out on a ton of deals. 

I do have a family member whom I trust who lives near my target area who I have check it out. Sometimes areas are so run down he doesn't get out of the car. 

Utilize your due diligence period so you don't feel pressured to check it out before making an offer. Worst case you make an offer, gets accepted, have your realtor and contractor check it out, if its not what you were expecting then back out. 

I think it depends.. if your in the business so to speak its easier to trust others and use on line methods.

however if your embarking on your journey I would think a trip to your first purchase is warranted.

just check on the Morris/Oceanpointe threads and see what happens when folks buy site unseen and put blind faith and trust in the seller marketer..

@Michael J. Beasley Before I developed my team out in Cincinnati I would have to fly out there so it was a big pain. I would fly out to view, then fly out again to get bids from contractors and set up a lockbox.

Now I view properties online via Redfin, determine if I want the property and what I want to do with it, then I pay my General Contractor to go out and view the property and take a complete walkthrough inside and out video and send me a report of what needs repair and the cost to do so. Then if I go with him he refunds the $100 off the last draw.

Now if it is a house that is rent ready I then ask my agent to go view it real quick to make sure I am not missing anything. 

Both of these take a good team and trust. I still fly out once a quarter because I am a little bit of a control freak and I like to take them out to dinner after the projects for that quarter are complete as a thank you and develop both a personal professional relationship with them.

The big thing I want to make sure is that they know I am not taking advantage of them and what they are doing for me is greatly appreciated and that as long as they help me grow I will do everything I can to help them grow as well. 

Sean Carroll, Contractor

I've bought, rented, and sold several rent properties without ever seeing them.  

  • Worried about the area?  - You can do that research online.  You can even google-drive the street.
  • Worried about the condition of the property?   Hire an inspector.  Have them take lots of pictures.
  • Worried about over-paying?  Get a bank loan and the appraisal will tell you the value.
  • Worried about rehab?   Buy turnkey or get a solid contractor to give you a quote.
  • Worried about renting it?  Talk to a qualified property manager.

If you know the area is solid, you know the property value, what it will cost to put it into rentable condition, and what it will rent for, what more do you need?

All three of my rentals (two out of state and one an hour and a half from me) were bought sight unseen.  I relied on photos, Google Maps, and other online resources.  I bought them at a VERY low price.  One had a missing air conditioner (stolen) which I didn't anticipate.  Not a big deal.  One had a mold issue in the based....that was a big deal.  The third just needed a bit of rehab.  My biggest challenge was getting keys to the places (I had to break into one of the homes when I took possession - it was a holiday weekend and it is in a small town with no locksmiths available).

(720) 598-0793
Originally posted by @Michael J. Beasley :

Hello, People of BP!

I want to know how those of you who are out of state investors do it. Do you actually travel/drive/fly to do a walkthrough on the property before you make an offer? I feel like that lapse in time could jeopardize a potentially great deal. However, it seems woefully irresponsible to purchase sight unseen. Looking for some advice here. Thanks!

A good local property manager you intend to use has skin in the game and can help with the eyes on the ground. I'm starting to feel since they are in it with you, they have more skin than a transaction based realtor (no offense). I will be giving my PM a bonus if I can locate, close and rent within 45 days at 10% CoC return.

@Sean Carroll Looks like you're hear in the Bay Area and you invest in Ohio as well. 

@Michael J. Beasley You need to decide what you are looking for and then decide on a market for out of state. Betting on Appreciation or hoping for a growing market? There's plenty of knowledgeable people on here to give you ideas. As for me,...I've chosen steady, boring, cashflow and I chose Cleveland. Why, because with due diligence I've been able to close on 3 different rental properties out there that are all at least the 3 % rule in "C" Neighborhoods. Two Duplexes and a SFR. I also have a couple of rentals here in the San Francisco Bay Area and they are NOT even meeting the 1% Rule. I'm still cashflow positive on one of them and the other one I'm Househacking in so it's not bad at all. I would say once you pick a market, it's worth it to fly out there. Interview some agents and property managers first and get their feedback on where to buy rentals. Make sure the agents and PM's you interview also own investment property so you'll know you're dealing with the right mindset.

1. Even so, what I do when I see a property i like I call the listing agent directly. I let them know I'm preapproved with a lender and want to ask a few questions about the property.

2. I ask them, "If I was standing right in front of the property itself, is there anything obvious I would see that would catch my attention from the outside like peeling paint, missing roof shingles, mattresses on the porch  or a rotting fence?

3. Why are the owners selling?

4. How flexible are they on their asking price?

THEN I would call my agent and prospective property manager that I've picked out and ask them if they can drive past the property to see if they see some obvious things wrong.

THEN I would have my agent write an offer, contingent upon an inspection, appraisal and verification of rents. 

Your inspector will be happy to talk with you by phone about the inspection as well.

So far this has worked for me on 3 out of state properties. 

Great advice guys. Thanks for this. I won't respond to each comment, but I've read each one and I'll be taking this advice into account when I finally get my first deal going. Thank you!!

We have almost always taken a trip to see the property firsthand.  In a market we are familiar with and already own property, we might get it under contract first and visit during the due diligence, but when starting out in a market, seeing everything firsthand is important, as well as meeting the team on the ground you want to work with, especially if you are new to investing and you are risk averse.

When we feel we are ready to buy, we schedule a trip, and a couple of days before the trip look at the current inventory, whether tk operator, MLS listings from agent, or wholesale deals. This way when we get there, we can look at the interesting ones firsthand and are in a position to move right away, and have the comfort of viewing the property, street and neighborhood first.

If you schedule your trip around a local REIA meeting, you can make further connections and maybe even find better deals!

Originally posted by @Michael J. Beasley :

Hello, People of BP!

I want to know how those of you who are out of state investors do it. Do you actually travel/drive/fly to do a walkthrough on the property before you make an offer? I feel like that lapse in time could jeopardize a potentially great deal. However, it seems woefully irresponsible to purchase sight unseen. Looking for some advice here. Thanks!

I often see a mix. Some people who trust the Turnkey provider and their product buy sight unseen. Others want to fly out to view it. The only risk with flying out is that when you get home it may be purchased. On the plus side, at least you got to see the company and what they provide. Now, if we are just talking about properties on the MLS, I would be prepared to sign a PA while you are in town!

Tom Ott, Real Estate Agent in OH (#2016003865)
440-749-4043

You have got to have boots on the ground working for you that you trust.  Contractor or real estate broker you use to phyiscally look at the property first.  Have a check list of items you want him to check out.  -foundation, roof, windows etc....

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@Michael J. Beasley

I assist several out of state buyer clients in Cincinnati. The way we typically structure the acquisition is by identifying a property that meets their metrics or is very close. We then write the offer sight unseen to save time (they cant physically come see the property anyway, and I do not have time to look at every property every client has a slight or moderate interest in). If we can get the property under contract within their criteria, then I do an initial walk through, I take a lot of notes, photos, repair estimates, and videos if needed. I try to be their eyes and ears. If there is nothing of substantial concern, we move forward with our inspections, and then to closing assuming there are no surprises or issues that pop up. I have had a lot of success with this model and done a lot of out of state business. Any good agent who works with oos buyers should be doing this for you. Luckily for my clients, I am doing my own rehabs and buying my own rentals, so I can give pretty accurate repair estimates, and contractor referrals also. 

Originally posted by @Michael J. Beasley :

Hello, People of BP!

I want to know how those of you who are out of state investors do it. Do you actually travel/drive/fly to do a walkthrough on the property before you make an offer? I feel like that lapse in time could jeopardize a potentially great deal. However, it seems woefully irresponsible to purchase sight unseen. Looking for some advice here. Thanks!

Good question Michael. 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.
James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

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