Investing in out of state is it necessary to visit prior?

18 Replies

Hi I'm new to investing out of state and am looking at the Cleveland market. My business partner and I have invested in some homes in California and are selling one and doing a 1031 exchange. However through reading alot of literature alot of investors are saying its not necessary to visit the property before investing with the use of technology and video conferencing its much easier. I believe we should meet the agent/property management company in person and really get a feel for the property, it's a Turnkey 20+ unit apartment complex. My partner is saying it's not necessary, what are your thoughts it's a large investment. 

Hey Suzanne.  We work with a lot of out of state investors and they are all different!  I personally recommend that people always come and get a feel for  the city, meet with people, and really build a team they trust.  I think the risk factor is to high, as there are a lot of people who will sell anything to anyone...

I cant fathom making that kind of investment without checking out the property in person and the PM who will be your lifeblood..  on line does not cut it in my mind

I personally wouldn't buy any out of state property without hopping on a plane and going to see it first.

Nevertheless a "turnkey" 20+ unit apartment complex with property management I've yet to meet as well.

@Suzanne Chan

I live in California and I invest in Cleveland. I tell people all the time that if they have a partner or relative that doesn't want to spend the money to fly out to where they will potentially invest in then they should find another partner. I flew out to Ohio, twice last year to meet with (Potential) PMs and Agents and properties before I started investing out there. I'm not saying you need to go twice but for sure at least once.....and all I'm buying are SFRs, duplexes and triplexes. There is NO WAY I would buy a 20 unit building in a city I've never been to. Besides....IF you do buy the property then the trip will be a write off anyway.

I concur with Jay - how can someone possibly consider spending hundreds of thousands of dollars on something without ever seeing it?

In addition to seeing the property yourself, you need to put in face-to-face time with your property manager to build the type of relationship you need to be successful. Otherwise you are just some easily ignored voice on the end of a phone.

My wife or I fly to see every property we purchase OOS, conduct the walkthrough with our property manager and our contractors, the inspection with the building inspector, & if possible be there for the appraisal as well. This is part of your due diligence as an investor, and substantially reduces your risk when buying.
Sure, you can farm all this out to someone else, but you had better have a significant level of trust in their abilities - but keep in mind, no one will ever protect your money like you will.

Originally posted by @Suzanne Chan :

Hi I'm new to investing out of state and am looking at the Cleveland market. My business partner and I have invested in some homes in California and are selling one and doing a 1031 exchange. However through reading alot of literature alot of investors are saying its not necessary to visit the property before investing with the use of technology and video conferencing its much easier. I believe we should meet the agent/property management company in person and really get a feel for the property, it's a Turnkey 20+ unit apartment complex. My partner is saying it's not necessary, what are your thoughts it's a large investment. 

Suzanne,

If you want to properly align the risks you are taking with your expectations, then you have to meet the people you will be relying on to manage your investments.  You have to meet the agent, the property manager, the renovation crews and se for yourself the entire operation.  With single-family homes, this is much more important than the property itself.   When it comes to multi-family properties, I would think meeting the team is still very important, but you would have to see the property too.  Your investment is simply too important to not take the time.  It is a minor expense - especially if you decide not to move forward after seeing what you see.  At that point, the expense will be small compared to the risks you would have faced had you not met them.  Then again, if you meet them and you really like the team, this may lead to even more investments.

Best of luck to you ~

Hi guys this is great I'll likely go and pay out of pocket on my own. There are lots of books encouraging this but I disagree, not only to see the property but also to build relationships with the property manager is essential. As much as technology has made things easier I just think there are some intangibles I'm not convinced we should concede. 

(I'm a bit late to the thread, but...) 

I think it would be the #1 dumbest thing possible to not go see that size property before you purchase it. More than anything- why not go see it? You only need a couple hundred bucks for a plane ticket and a couple days.

I work with turnkeys a lot and tons of people buy those sight unseen. But those are small SFRs and, while I still prefer people go see them before they buy them, since they are coming through a steady channel from a proven turnkey provider, there's less risk (typically) in not going to see it. So part of that dynamic- the turnkeys from the turnkey providers- might be why you hear a lot that people don't go see their properties before buying. But anything outside of turnkey companies, I'm 100% against anyone trusting to buy without going to see it themselves. And again, there's no legit reason to not go see it if all it takes is a planet ticket (which is not very costly compared to what you are spending on the property or may lose on a bunk investment) and a weekend.

absolutely agree, 21 unit is too large to do from out of state. I have bought sfh without seeing but my downside is limited.

i was looking at a 21 unit analysis recently and there is very little cashflow with the high utilities, taxes and adding up mgmt fees. The price and value add opportunity is important at that size of purchase. dont trust pro formas from the marketing who claim properties are turnkey

@Suzanne Chan It can be done now with all the tech right and still it might not be optimal. Considering let's say everything looks good online, reports , inspections etc ...and you buy it. Oh we forgot to mention this house is located between a longtime gang members house with tons of dudes hanging in the front yard and the absolute worst hoarder house you have seen is the other adjacent. They don't put that in the reports usually, why? Because you are OOS and no one really cares about what happens to you next. Meanwhile every other local investor and their mother has been passing on that same house for over a decade. 

Good luck with your search! 

Thank you to all of you who responded, I don't think I will change my partner's mind but this all very useful, I may still make a visit out there and get a better idea of the area and develop some relationships with PM and Agents. Neighborhood lines change dramatically, so it would be best to check them, so i can justify the cost at least on research too.

I will NOT advise you to buy without visiting if you dont have a trusted team on ground.

I buy properties every time from out of state and i need not visit the proprrty: this is beacuse I have a team on ground, BUT i will not buy 20+ without visiting and seeing.

So hop into the plane and see for yourself.

my one cent..