Long distance real estate without the visit

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Long distance real estate without the visit

Jennifer Roberts
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!

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Doug Spence
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!

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Jennifer Roberts, Somethings not jiving with your timing. If you're in the 1031 now and have 55 days to purchase then your 45 day list is already set and can't be changed.  If you mean that your sale and the start of your exchange clock is in 10 days then you actually have the 45 days after the closing of the sale to "identify" not purchase your replacement property.  You can take the full 45 days after your sale closes to identify.  And then you have an additional 135 days to close (180 days total).  

    But of course this is the kind of market it is.  So I highly recommend to our clients that you try to get your property under contract during the 45 days to mitigate some risk.  Many of our folks actually get their new property under contract before their old property sells.  And that mitigates risk even further.

    In spite of the fear of the timelines over 90% of our clients (and I'm guessing all 1031 exchangers) are able to successfully complete their exchanges with replacement properties they like.  The ones who have trouble are those who are not laser focused on area and type before their sale.  Trying to cast too broad a net will doom you.

    So take the next 10 days to decide the where and the what.  And then dig dig dig.  If you don't have a nationwide network of realtors you know and trust all that you'll get are property leads that may or may not be good (because you don't know the source quality).  That's a bad place to be with a 45 day clock ticking.

    Can you get even a short extension?  That might help your search.

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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    5y
    Originally posted by @Doug Spence:

    I have purchased multiple investment properties out of state, without seeing them, and I haven't regretted it once.  

    Do you think the big-time real estate investors walk through every property they purchase? No way. 

    David Greene can buy sight-unseen because he is an experienced real estate investor and agent, who has been in literally thousands of houses. Big-time real estate investors are either so well funded that a dud property won't kill their finances, or have an understanding of houses and layouts similar to David, by having been in thousands of houses.

    Unless you are an experienced real estate investor, I would NOT buy sight-unseen.

    If you can't afford the plane trip, you can't afford to be buying the house. 

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  • Jim Spatzenfeld
    Investor · NorCal · Member since 2015 · 281 posts · 240 votes
    5y

    The worst house I ever owned, I had a hard time selling it. I listed it dirt cheap yet nobody that looked at it made an offer. At the end someone from England bought it unseen. I like those that buy unseen! But sorry, I don’t have any bad house anymore for sale.

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  • Austen Carroll
    Rental Property Investor · Raleigh, NC · Member since 2019 · 66 posts · 43 votes
    5y

    @Jennifer Roberts

    Hey Jennifer,

    Military person here. I think the intent on aiming for mil tenants is a good and common idea. They have a steady paycheck, the get housing allowance etc

    I'm no where near in the area of expertise on whether you should or shouldnt... that def depends on the numbers you crunch/market.

    Just wanted to let you know if you didnt..... fed law says if we're deploying or relocating then we can void any contracts and or leases with no fees/penalties.

    So if you get a tenant who up and deploys for 9 months.... bam they're allowed to bail on that year lease they just signed. (Just an example)

    Last bit..... its just a nugget of knowledge for you, I'm sure you'd be able to find a new tenant quickly

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  • Cole BostromPro Member
    Investor · MN · Member since 2019 · 2 posts · 0 votes
    5y

    @Theresa Harris how do the closing documents get signed then? Do they do esign for closing now?

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  • Jennifer Roberts
    OP
    Rental Property Investor · CA · Member since 2021 · 37 posts · 19 votes
    5y

    @John Teachout agreed. My husband and I both agree that if its not right we wont buy. But I’m definitely feeling the pressure of the timeline right now with everything else. 

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  • Jennifer Roberts
    OP
    Rental Property Investor · CA · Member since 2021 · 37 posts · 19 votes
    5y

    @Austen Carroll yes! We are military as well. We’ve been thinking about this for a long while, yet still not 100%, i know the repercussions.and even with the deployments I’m calculating a decent vacancy rate. Its def not winning the lotto but it does seem like a secure investmet for now. However I am still doing the normal second guessing. 

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  • Jennifer Roberts
    OP
    Rental Property Investor · CA · Member since 2021 · 37 posts · 19 votes
    5y

    @Jim Spatzenfeld thank goodness I’m not looking for cheap! I’m definitely doing my due diligence, checking in, having lots of conversations. Glad you were able to offload!

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  • Jim Spatzenfeld
    Investor · NorCal · Member since 2015 · 281 posts · 240 votes
    5y
    Originally posted by @Jennifer Roberts:

    @Jim Spatzenfeld thank goodness I’m not looking for cheap! I’m definitely doing my due diligence, checking in, having lots of conversations. Glad you were able to offload!

    Well, local buyers must have disagreed with my opinion of "cheap", I think for them it was priced too high to buy (for the condition of the house).

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  • Jennifer Roberts
    OP
    Rental Property Investor · CA · Member since 2021 · 37 posts · 19 votes
    5y

    @Dave Foster yes. The time of posting I had 55 days. As of july 9, 45. I have an intermediary so I’m gathering all my info. Excellent advice! My brain definitely hurts from info overload!!

    1Reply
  • Cedric Volkmer
    Peoria, IL · Member since 2021 · 20 posts · 14 votes
    5y

    @Jennifer Roberts

    This is a great post and glad to read through the comments.

    I just put my first duplex under contract last Thursday without stepping a foot in the property. I have had a family member walk me through it while FaceTime.

    I didn’t get the “feeling” for the house you get when touring, but overall I had a good experience.

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  • Sastry Srini
    Canton, MI · Member since 2016 · 112 posts · 47 votes
    5y

    @Jennifer Roberts Thanks for starting the thread. I have purchased couple of properties out of state without visiting them. There is a lot of information that you can get online.  Of course, the purchases were applied with criteria like  a) less than $200k , b) brand new or recently built constructions c) B+ and growth market . As long as you can have the criteria met, engage a reliable agent to identify/narrow/negotiate.  BP is one of the good sources you find the agents and referrals.  Good luck with your investments.  

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  • Adrienne Green
    Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes
    5y

    Hi @Jennifer Roberts! I'm a Realtor who works with a lot of out of town investors who purchase with me in Chattanooga, TN.  I'd say maybe 1 in 20 clients come out to see the area at the beginning of their house hunt, and I've had 3 buyers fly in to see the house while it's under contract.  It is absolutely NOT necessary to see it in person when buying an investment.

    For my out of town buyers, I first give them some resources to learn about the area: local news sources, crime maps, local rent estimator tools, etc.  When they're interested in a house, we collaborate on researching it, and I tour the house to take photos and videos that I put in an online album for them.  I do a 360 video in front of the house to show them the neighborhood, do a video walk-through, and take photos of all issues and all of the big ticket items.  

    Assuming they go under contract, in my market it's still standard to have an inspection period for a home inspection that will also the buyer to walk away if big issues are found.

    I also have a local contractor and property manager that help my out of town buyers along the way.

    I hope this helps you see what's possible, and how other out of town investors do it!

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y
    Originally posted by @Cole Bostrom:

    @Theresa Harris how do the closing documents get signed then? Do they do esign for closing now?

     Offers were signed via docusign, final documents at closing, I had to get a lawyer locally to go through the documents and witness my signature and in the area where the property was located (different province).  The local one sent them to the one in the other province, so extra costs were involved. 

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    5y

    Buying out of state is tough enough, I would definitely recommend visiting yourself regardless of whether how much a time crunch there is. If you have a great team in place who have done lots of deals for you out of state, that would be another thing. On the first one (and multiple following that one), I would definitely recommend viewing it yourself in person and vetting the agent/manager/contractor, etc. in person too.

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  • Blake Pullin
    Austin, TX · Member since 2016 · 3 posts · 1 vote
    5y

    @Jennifer Roberts

    Hi Jennifer. There’s positive and negative experiences on both sides of buying without seeing. I have bought property without ever seeing or visiting them, but I have a trusted Realtor that knows what they are doing and knows what I want in a property. Those have been some of my best investments actually so i never had a problem.

    As far as your 1031- with the short timeline to identify and then close, if you’re interested, I have a financial planner contact that provides a 1031 backup option/alternative which helps shield the proceeds from capital gains in the event that the property lined up for the 1031 falls through. So sort of a safety net. Not everyone qualifies for this as they have to be a qualified investor, but this literally saved a client of mine about $400k in capital gains tax exposure. So if you’d like to learn about this just let me know and I’m happy to connect you via email with her and you all can line up time to visit about this option.

    Cheers,

    Blake

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  • Mel Hayes
    Investor · Los Angeles, CA · Member since 2016 · 256 posts · 111 votes
    5y

    @Jennifer Roberts I'm not as worried about the property itself as I am worried about the area and overall neighborhood. I think visiting the city and getting a feel for the area is more important than touring the property.

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