Rental Property Investor · CA · Member since 2021 · 37 posts · 19 votes
Hello all, I'm currently doing a 1031. I have approximately 55 days to purchase. I'm selling California real estate and the prices of course are high, and I'm moving to a more stable market. I've decided to purchase near military bases in an area that has good wages/price/rent ratio. Possibly an airbnb as well. With that said, time is of the essence. Even though I've read "the books" and am in contact with trusted real estate agents, wondering what your thoughts are, if you are an experienced long distance real estate investor that buys sight unseen. Any info is greatly appreciated!
Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
5y
I have purchased multiple investment properties out of state, without seeing them, and I haven't regretted it once. Unless you are a home inspector, appraiser, or are otherwise very knowledgeable about what to look for in a property (I am not!) then you're just wasting time and money by going to look at it. It's much more important to have a rock star real estate agent who understands your goals and what you're looking for in a home and neighborhood and then just hire a great inspector to check the condition of the home itself. If you have the right people in the right jobs, then you can mitigate the risk of buying out of state, sight unseen.
Do you think the big-time real estate investors walk through every property they purchase? No way. They have people for that, and these people are way better at looking at properties than they are.
Good luck on your 1031 and keep us updated on your journey!
Jennifer, I always, always, always personally inspect properties before buying them! I'll drive 300 miles in a day just to inspect a property personally. There are some things that a virtual inspection may not uncover. Here are some examples/thoughts:
-Does your RE agent on the ground understand how to identify environmental waste, illegal dumping, etc.? I know a local investor who spent tens of thousands of dollars remediating a site he purchased unseen after he discovered the neighbor had been using it as a dump for his used engine oil. The only signs initially were a faint oil smell and a few spots of dead grass.
-Many people hate inspecting crawl spaces. I bring a tyvec suit, gloves, headlamp, and check them out myself. In many cases houses that look pristine have major foundation issues. Always check out the slab/basement/crawl space as long as it's safe to do so.
-Will your agent diligently check out the attic? Often attics hide major problems under feet of blown-in insulation.
-What about the condition of the sewer pipe and water line?
Have you considered taking a week trip to the region you'd like to invest in? Get in touch with a local RE agent and line up multiple properties to visit. If this is for investment purposes, I imagine you're focused on ROI.
I am an out of state investor (and local investor) and I put properties under contract without visiting them. First I vet the location, then I put under contract, then I hire professionals to inspect them, then I read the reports of the professionals I hired. So yes, you can 100% do it.
Real Estate Agent · Wellington, FL · Member since 2018 · 36 posts · 17 votes
5y
I have had several people purchase sight unseen outside of a video / FaceTime call. Unless you are an inspector or know what to look for, walking the halls is more a "lets me feel safe"
Hire a good inspector and if need be throw them another $50-100 to go through the line items of the major things and get their opinion
But you dont need to walk the property yourself unless doing so brings value.
Columbus, OH · Member since 2021 · 201 posts · 166 votes
5y
@Jennifer Roberts if you are selling and have 1031 money, then you aren't new to RE Investing. If you don't know the market, then you need a team on the ground that you can trust. Get your core 4: a local, rockstar Realtor, contractor, lender, and property manager.
@Eric James just curious, have you known investors that have done this? I have known some that have and some that have not. I’m on this form to collect information. That is all.
I have personally bought real estate locally and never gone to see or visit the place. It doesn't matter if you're 10 miles or 1000 miles as long as you have trusted people. A good agent to help identify deals, a contractor to give you an idea of renovations, and a PM who will take care of everything at the property!
@Eric James just curious, have you known investors that have done this? I have known some that have and some that have not. I’m on this form to collect information. That is all.
I have personally bought real estate locally and never gone to see or visit the place. It doesn't matter if you're 10 miles or 1000 miles as long as you have trusted people. A good agent to help identify deals, a contractor to give you an idea of renovations, and a PM who will take care of everything at the property!
It doesn't matter.....until it does. Sooner or later you'll get burned.
@Eric James just curious, have you known investors that have done this? I have known some that have and some that have not. I’m on this form to collect information. That is all.
I have personally bought real estate locally and never gone to see or visit the place. It doesn't matter if you're 10 miles or 1000 miles as long as you have trusted people. A good agent to help identify deals, a contractor to give you an idea of renovations, and a PM who will take care of everything at the property!
It doesn't matter.....until it does. Sooner or later you'll get burned.
If you've got the right people in place, you can mitigate that. Thats why David Green always preaches about the core 4.
@Eric James just curious, have you known investors that have done this? I have known some that have and some that have not. I’m on this form to collect information. That is all.
I have personally bought real estate locally and never gone to see or visit the place. It doesn't matter if you're 10 miles or 1000 miles as long as you have trusted people. A good agent to help identify deals, a contractor to give you an idea of renovations, and a PM who will take care of everything at the property!
It doesn't matter.....until it does. Sooner or later you'll get burned.
I agree 100%. Trust no one (except family, maybe lol!) and always verify. I've avoided many rotten deals by visiting the sites in person. One vacant site looked fantastic from the air/maps but turned out to be within a confluence of seasonal streams. Turns out the owner purchased the property site-unseen on Ebay and had never visited the property himself. Another had been used for the disposal of hundreds of old creosote railroad ties. Yet another was actually the center of a local drainage wash (not noted on the latest topo). Many more examples. Vacant land can be trickier than improved. Still there are many potential issues with improved property the untrained eye may miss.
In today's hot market, missing some issues may not be a problem. If the market corrects however, you could be left holding the bag!
@Eric James just curious, have you known investors that have done this? I have known some that have and some that have not. I’m on this form to collect information. That is all.
I have personally bought real estate locally and never gone to see or visit the place. It doesn't matter if you're 10 miles or 1000 miles as long as you have trusted people. A good agent to help identify deals, a contractor to give you an idea of renovations, and a PM who will take care of everything at the property!
It doesn't matter.....until it does. Sooner or later you'll get burned.
Everything has risk involved. If you are informed of that risk, then you can accept it or not. People buy Crypto all the time and have no idea what they are actually purchasing, hoping things go up (foolish). With Real Estate (like everything you invest in), you should understand the risks and rewards. Getting burned implies something happened that you couldn't have anticipated. Potentially losing money should be a part of your risk assessment.
Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
5y
I agree with @Theresa Harris. Especially considering the fact that you won't be able to go to the property on short notice, I'd encourage you to look closer or find some "boots on the ground" who you trust and can oversee the property for you.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
5y
Going to inspect a property only has value if you have the skills to identify issues. Many real estate investors don't know anything about carpentry, electrical, plumbing, mold remediation, foundation issues and so forth. If you don't have skills, you're going to be relying on the advice and knowledge of others. So whether the knowledgeable people live in your neighborhood or are 1000 miles away, it doesn't really matter. I myself would not buy an unseen property because we do all the repairs and refurbs ourselves. My son has purchased quite a few houses in a city he's never visited. He does have a team of people he trusts and gets the inspections done. A number of properties that looked great in the listing turned out to be disasters. As far as I know, any that he has closed on have been solid. One disadvantage of the 1031 process is that it can cause you to make deals under time pressure, so be careful.
Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
5y
Don’t buy site inseen unless you are willing to trust others with your money. I almost did that once only to find out they were powerlines directly across the street which would make it very hard to rent or sell .
@Eric James just curious, have you known investors that have done this? I have known some that have and some that have not. I’m on this form to collect information. That is all.
I have personally bought real estate locally and never gone to see or visit the place. It doesn't matter if you're 10 miles or 1000 miles as long as you have trusted people. A good agent to help identify deals, a contractor to give you an idea of renovations, and a PM who will take care of everything at the property!
It doesn't matter.....until it does. Sooner or later you'll get burned.
Everything has risk involved. If you are informed of that risk, then you can accept it or not. People buy Crypto all the time and have no idea what they are actually purchasing, hoping things go up (foolish). With Real Estate (like everything you invest in), you should understand the risks and rewards. Getting burned implies something happened that you couldn't have anticipated. Potentially losing money should be a part of your risk assessment.
Exactly. The problem is IMO that you may not understand all of the risks if you don't visit a property in person. RE is so much more complex than crypto, stocks, bonds, gold, etc. and should be taken seriously. You may lose lots of money in bad crypto investments, however you can be injured or worse if you make a major RE mistake. I was held up at gunpoint while researching one deal. Glad I didn't invest there!
Congrats on getting a property sold. I know how stressful it can be with a ticking clock. The easiest way to go about is to get a home inspector. Go to one of those advisory websites that list contractors and find one that has a good rating and have them do a full inspection. They get a flat fee regardless if you buy or not. A RE agent is getting a commission so their opinion if you are working with them for the first time, should be taken with a grain of salt. However, utilize them by having them do Facetime and walk the property so you can see and ask questions. But most importantly have them pull up comps, rent comps, etc.
Again use one of those websites to find the necessary contractors to give you bids.
I have done out-of-state deals sight unseen but had built a trusted team. In an upmarket everyone seems to be a genius. As if nothing can go wrong. But you should consider any place you will invest to take a flight out for a day. If you cant take a flight and go for the day to look at the property and do face to face with your new team then the property is too far to buy. Spending $500 is money well spent for a round trip before parking $100s of thousands of your hard-earned money into a deal.
I'm originally from CA and I have seen many 1031 coming to Houston and buying stupid deals in areas that many experienced locals like myself won't touch. Numbers work great on paper but sometimes in the real world, they don't turn out well.
Also, be careful in buying in a city that has one large employer like a military base as some banks will be nervous to loan especially if you are considering buying multi-family and have higher military personal as tenants. They can move during their lease term with a 30-day notice and you can't do anything about it if they show you deployment paperwork.
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
5y
You started the 1031 clock before even identifying a market and building a team there? Many investors buy site unseen successfully. No offense you’ll probably not be successful based on your decision making so far.
Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
5y
@Jennifer Roberts. I work with many out of state investors that never make the journey here. If you trust your Realtor they should be your boots on the ground. Always do FaceTime or zoom calls when they are at the property. I prefer that to Video.
Rental Property Investor · Delray Beach, FL · Member since 2014 · 224 posts · 169 votes
5y
You always have the inspection period to back out of a deal. You could put it UC, get a virtual walkthrough by your PM or realtor when you have the exclusive window (or god willing you could fly in, although I think this is totally trivial with today's technology), and then still get out of the contract if it turns out that you don't like what you saw. I've successfully done this a few times myself. People needing physical walkthroughs of every property in today's market are going to get dusted by more confident investors. Once you have that exclusive inspection period, then that is where you can afford to take your time.
Make sure you have a realtor that is knowledgeable in the market in that area, and has an eye for rental properties. It's a plus if they already have rental properties as well. If your realtor is used to shopping for owner-occupied houses, they wont have the same eye for it.
Make sure to hire a reputable home inspection company and review the reports in detail.
I think there's a stigma about not being "near" your property. Ask yourself:
1. What is the difference between a property 1 hour away or 1 state away? How do you really manage these differently?
2. What will you determine on your site visit that you would not have determined if you didn't make the trip?