Buying investment property outside of the state

12 Replies

What steps do you take when considering buying investment properties outside of the state that you normally invest in?

This is a good topic and each of us have a different way of doing this. I'm doing the same process now and would like to get comments and feedback from the BP community as well.

  • Pick a market
  • Research REI clubs in the area and go to the meetings if possible
  • Search for properties for sales in the area to find of sub-markets
  • Determine the crime rates, economic data, population of town, median income, etc.
  • Find out if these areas have any revitalization plan in place.
  • Talk to local bankers, mortgage brokers, management companies and realtors. 
  • Find a good management company

I'm sure I don't have everything. Please add to the list as you see fit.

@Vi K. What if it's to far to drive, do you do all the research and then take a flight over to check things out?

Of course you do all the research before you head out. A few years ago, I flew to Cleveland for 2 weeks. I didn't buy anything then, but learned a lot. What I should have done was to do all my research back home then flew out. But instead I just flew out with a list of properties to see and all the realtors.

What I am going to do now is send out LOIs until I get an offer accepted. Then at that point I will fly out there.

On top of what @Vi K.  mentioned - Check the state's government website for tenant landlord laws and to see if any special fillings/registrations need to be done before renting. Where Illinois is relaxed on that Indiana has stipulations.

@Jeff Plair  yes, the right market is very important but I think the team on the ground that you assemble is even more important.

A bad team in a great market will still produce less than satisfactory results vs. a great team in a average market will produce very favorable results.

I would suggest narrowing the market choices down to a small few [I assume Indianapolis is on your radar?  If not, is should be!] and then talk to LOTS of people in each market to see who may fit as a team member.

A great property manager is harder to find than a good contractor!

Good luck.

@Shawn Holsapple  how did you know? Lol so getting familiar with the area and building a team to help lead the way!!

Agree with the importance of the team on the ground.  I live in SoCal and nothing cashflows here so everything i have is out of state.  I actually most recently am starting up in San Antonio - and started with getting recommendations from some people who know the area on a local broker who also happens to be a property manager and investor too.  Someone like that really appreciates what the out of town investor needs.  After reviewing the area and doing a lot of research i finally went down and viewed some buildings with them.  Am about to close on the first one.  It's key to get that local relationship going with someone competent that you can trust.  They will turn you on to the right deals.

@Mark Mosch   what caps are you finding in San Antonio and on what types of properties?

Pick a turnkey company in the Midwest where everything is ordinary and the cash flow return and appreciation is more consistent.

Originally posted by @Jeff Plair:

What steps do you take when considering buying investment properties outside of the state that you normally invest in?

Hi Jeff,

I believe that there is great value to be found in Ohio and Michigan.

Please check out 2 blog post that I wrote for Bigger Pockets regarding the different types of asset classes and also what I consider to be a good strategy when looking to invest out of state or country.

I hope you find them useful.

Thanks and have a great day.

@Jeff Plair
I would say to pick a market that has the desired cash flow & appreciation you are looking for. Do as much research as possible and definitely visit. Start small until you build a team that you like. And don't hire anyone (broker/contractor/etc) without getting a good referral from another investor or someone you trust ....which BP can be helpful for. I believe there are lots of advantages of investing where you don't live (and can get a better return) but unfortunately our business is filled with scumbags so more due diligence is needed when investing afar where you aren't available to watch over everything as closely.

Depends on what you are wanting to accomplish. Are you talking about steps to take to find the market you want to buy in? Steps to take to buy a property? Steps you should take to manage, etc. 

I live in LA and have always bought out-of-state. The key first steps as a whole are- knowing what makes a good market and a good property, and knowing how to establish a team.

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