Buying Multi-Families Out of state

6 Replies

Hi everyone, 

I'm from Boston, MA but I don't want to invest in Boston because of increased real estate price and decreased ROI. I'm looking to invest in property down south. But, I'm not sure if it's logical to invest in a rental property out of state. Does anyone have any experience doing this and have any wisdom they are willing to share?

Also, what questions would you ask an agent about a property that is out of state to make sure you have a good understanding of the property and it's value? 

Hey @Darsh Pat, working on out-of-state investments is always an exciting task.  I'm dealing with a client purchasing from out-of-state right now, and I've found it really depends on finding an agent willing to do things for you.  First off, you need someone knowledgeable about the area and able to share wisdom about how the market is doing, what the rental market is like, etc.  If you don't have any friends or family in the state you're investing in, then hopefully you've found an agent that's willing to be the "boots on the ground" person.  Oftentimes I'd take photos or videos of the interior of the property so you had an idea of the condition.  Generally, you'll want some experienced professional to be able to give you an idea of the condition of the property, any expected repair costs, etc.  

It can be done, and you just need to find a person whose willing to invest the time into making it happen.

Hi @Darsh Pat, I am a agent/wholesaler in Florida and I have over 50 properties all over Florida that are all off-market. I also have provide a complete turnkey operation on any property you buy from me. If interested let me know.

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All I do is out of state!  I bailed on the CA market and I'm 100% Texas right now and starting to also look elsewhere.  As stated, they key is having a relationship with a good broken or agent to be those boots on ground for your in your absence and establishing a solid team of folks to service your needs. 

There have been a number of  BP podcasts and some blog posts I believe concerning this very subject. 

It's totally doable, but team and infrastructure must be solidly established! 

*Let me preface by saying that I do not know what size or class of properties you are targeting, or what scope of work your target properties generally require.

@Rob Harris nailed it that an honest, talented team and infrastructure is crucial. Without this, a good deal will go bad quickly. Best to build your team face-to-face.

This is very basic, but I am always surprised at how many out of state investors simply do not oversee their investment in-person enough to provide accountability to their boots on the ground (more important the larger the property). Don't invest out-of-state if you cannot travel when needed.

If the property ends up having issues (assume it will) and you cannot visit consistently enough to hold people accountable when needed, the broker will end up re-selling your property and making more money than you do. The more units you have in a given market, economies of scale will make travel expenses easier.

Hi Account Closed,

I'm a broker here in Illinois and we have some great rental markets out here. What type of investments are you looking for; price, units, cap, class? I'd love to see if we have anything here that could work for you. 

Account Closed  We are in a similar situation, since we're located in New York City.  We invest only in the South where, until recently, cap rates were significantly better than in NY.  (Recently, we're finding a lot of the New York money coming down south and pushing up prices.)

It's absolutely possible to own at a distance, but it's critical to have the right management company in place to oversee your property.  It's also essential to keep a tight rein on the company, with weekly calls and constant communication, so that they know you are not an absentee owner who is not paying attention to the asset.