Real Estate Agent · Minneapolis, MN · Member since 2008 · 193 posts · 7 votes
Call me old fashion, but I need to be able to drive by my properties occasionally as well as have the ability to pound on the door for my rent when it is late.
I have had 2 customer calls this week from people out of state looking to buy investment property in Minneapolis. One in fact lives in California, has never been to Minnesota, but just decided it would be a good place to own.
Let's assume for a second that these people are legit. Does anyone else own rental property (other than time-shares or fully managed vacation properties) in other states? Tell me how you bought it. Tell me how you maintain and rent it. Why did you need/want to go to another state?
It can be done; however, the difficult part is building a network of reliable and trustworthy people in the area you want to invest in. I recently pruchased a property across the country and I never even saw it; as of now its doing great! If you have a reliable agent, property manager, and property inspector it can be done. Let me know if you have any more questions.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
18y
Scott,
I'm with you - buy close to home. In the last few years, there were a lot of California investors here in Ohio. They're almost all gone after losing a BUNCH of money (many losing their property to foreclosure). I know from experience that it is hard enough to make money with rentals if they are close to home. Doing it long distance just adds another level of difficulty.
Property Manager · Portsmouth, NH · Member since 2008 · 102 posts · 13 votes
18y
...and it makes sense if you live in an area that is not projecting strong real estate growth.
The keys are:
1) See all properties for yourself.
2) Have a great property manager in place when you seal the deal.
3) Be super clear with the property manager about what you need.
There's more, but that's all I have space for right now.
BTW, coming out to Minn this summer to see friends and go to the State Fair - we're excited!
Real Estate Investor · Long Island, NY · Member since 2008 · 27 posts · 1 vote
18y
I own property in a different state and I wouldn't say its easy but if you put most of the right pieces in place it can most certainly work out. Its probably a little less work than being in the same area with the right mgnt. in place. Do the numbers correctly assuming a bad year, work out all loose ends with your mgnt., make sure the building your buying is in low maintainance condition, and if the numbers are still in the black you can proceed to make a move. There aren't many properties out there like this, but I believe if your patient enough things will surface. I don't see any immediate money but 5-10 years down the rode will be the start of your investing ventures with capital in place.
It can be done; however, the difficult part is building a network of reliable and trustworthy people in the area you want to invest in. I recently pruchased a property across the country and I never even saw it; as of now its doing great! If you have a reliable agent, property manager, and property inspector it can be done. Let me know if you have any more questions.
Real Estate Investor · Verne, IN · Member since 2008 · 107 posts · 0 votes
18y
Scott, I have owned several rentals in other states. Not out of interest but circumstance. I was stationed there in the AF and was transfered. I had several friends to watch my interest and it work very well. We also used it as an excuse to go back and visit the "investment property". The IRS allows this as well! I had one for around 18 years the other 15.
The tricky part is maintenance, I had the renters do the work and send me the receipts for material. I threw in extra to cover labor and it worked well.
We are looking for some type of property in the Jacksonville / St Augustine FL area. A nice beachhouse on highway A9 between the two would be great!
I may have to go down about once a month to do the "drive by" you spoke about. Twice a month from Oct through March !!
I have connected investors across the country with rental properties. It works in my situation because I have visited this company and the houses. The owner actually has everything in place. He finances but most pay cash because these homes are very cheap, has his crew rehab them, his company manages the property, collects the rent, etc. He has been doing this for many, many years and has investors come back to him. He takes the maintenance fee out of the rent and sends the investors the check. I feel very confident with this guy and so I am very willing to find investors for him.
Real Estate Investor · Issaquah, WA · Member since 2008 · 34 posts · 3 votes
18y
I am doing all of my investing out of state. It took me about 3 weeks to compile a list of reliable people, but once I did...the floor was mine. The way I see it, I know nothing about physically doing rehab work or being a landlord. That's why I pay people to do it. Pay a contractor to do the rehab and hire a project manager to oversee things. They send pictures and updates of everything that happens. Your property manager will take over the rest once it is rented. To me, it's worth the 10% fee. I want to be able to have these rentals on auto pilot. Why do more work then you have to? 8)
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
18y
There is NO autopilot! That's just silly guru nonsense meant to imply to newbies that they can get rich without putting in a lot of work, which is ridiculous! I don't know a single successful investor with a substantial portfolio that claims their business is on autopilot!!!
Real Estate Investor · Member since 2008 · 13 posts · 0 votes
18y
I have 15 rental properties out of state, and I'll admit, I did take my lumps at first. Now I finally have a great management company that is well worth the minimal fee they charge. If you find a market that has good cash flow potential, go there and visit, build a power team (broker, property manager, escrow, appraiser you can trust, etc), and get to know the area. At that point, you should have enough info to make a good decision on what and where to buy without having to go there everytime.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
It's technically out of state but only a short distance away. I don't see a problem with out of state investing, the problem that people were having the past 5 years was they were simply overpaying for property. If you overpay for property anywhere you're screwed - especially out of state. The simple answer is to buy where you have done your research (whether it's in state or out of state).
BTW - Funny story about the california buyers. I was talking to some Missouri farmers who were selling their land to California buyers sight unseen for $5,000 an acre...while other locals were selling it for $1,000 an acre. Amazing what a little research will do.
Property Manager · Portsmouth, NH · Member since 2008 · 102 posts · 13 votes
18y
To my mind the worst possible situation (notwithstanding the quality of the individual rental market) is to buy a few hours away and try to manage yourself. I've been there. In my past life managing my own properties, I had so many emergency calls that involved a half hour fix and an hour drive (each way). Very disruptive to the rest of your life.
Better now that I have others manage - but when the NH market strengthens, I'll sell those properties and buy out of state.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
Originally posted by "EyeSoreNoMore":
No out of state properties for me... you've got to know your limits (and as of today, this is one of mine :wink: )
Under the right circumstances, with the right partners, I'd certainly consider it, but not all by my lonesome :cry:
Now hold on Ms. Texas - it's not fair when you get a state the size of New England! Lol....
Seriously though, I've studied Texas real estate and you've got different areas for different strategies. No need to go out of state where you're at. I only go out of state because I live in Chicago and Chicago cashflow sucks compared to what I can get an hour away in Indiana.
Real Estate Investor · Mont Belvieu, TX · Member since 2008 · 85 posts · 35 votes
18y
Ha! Good point :whistle1:
Ok, lets see-- most of our counties are the size of New England states. So maybe its more accurate to say I'm not comfortable investing farther than I can drive in one day and get back in time to watch King of the Hill reruns :mrgreen:
Of course things change and I'm learning to never say never...
Real Estate Investor · Brooklyn, NY · Member since 2008 · 11 posts · 0 votes
18y
the reason i see investing outside of my home state(CA), is because i make a very good income here that would go a long way in another state....but would hardly make a downpayment here. IDK though i could be wrong, ive been wrong before! its something that i have thought a lot about seeing as i want to buy my first rental property by the end of the year, and i obviously need to know the marketplace im investing in no matter where it is at...any input would be much appreciated..
thanks
Involved In Real Estate · Naples Florida · Member since 2008 · 54 posts · 11 votes
18y
When I lived in Florida I had properties in Central Florida and South Georgia and it seemed to work out just fine. The farthest property was 3 1/2 hours away so I could still get to them on a weekend if I absolutely needed to. When I moved to Vegas it proved to much more difficult managing properties from 2500 miles away. It's a bad feeling to have to take the word of your property manager, handyman, etc and not be able to hold them accountable. With the exception of one house in Orlando I've liquidated everything I had on the East Coast. My advice would be to stay close to home.
Real Estate Investor · Wyoming, MI · Member since 2008 · 195 posts · 10 votes
18y
I personally don't have out of state property just YET..but since we do real estate investing for people from California, Colorado and Ohio, I do know what to look for when we decide to invest out of state.
Experience, competence, excellent management and just a flat out desire to do the job right are some things to look for.
Some investors may never physically see the property, so they REALLY have to trust what the investment company and property management company do. :kewl:
Real Estate Coach · Thornton, CO · Member since 2008 · 55 posts · 3 votes
18y
Yes I have property in Tenn, Utah and Texas - I haven't even seen the properties in Tenn or Texas but owned them for 3 years.
just got a good property management firm and they will take care of it (better then most landlords take care of their properties they live 2 miles from).
I understand people's concern but most people are terrible landlords - too nice, try to fix everything themselves, etc so it doesn't matter if the house is in the same town or out of state.
Real Estate Investor · Bozeman, MT · Member since 2008 · 77 posts · 3 votes
18y
As a multifamily investor I don't currently own residential property in my home state (Montana) - it's all out of state and professionally managed. Professional management is the norm in the multifamily world, and there are very good companies out there.
That said, I have several investment partners who own portfolios of SFH out of their home state, and they have more issues with their SFH property management that with their multifamily holdings by far. Research those PM companies carefully.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
18y
I agree. All of my investments are out of state, and my first 5 when I started were purchased sight unseen. I still have 4 of them today! As mentioned, management is the key, and a good PM can be in many ways, better than managing yourself. Particularly for newbies who do not have experience managing properties.
There has been a lot opinions made that managing property yourself is the way to go because "no one will take care of your property better than you". This of course is only an opinion in which I disagree. When using a PM, you simply must make the right choice of who to hire and manage the PM properly. I have said many times before, just because you have a PM, does not mean that you do not still manage the business.
Real Estate Consultant · Somerville, MA · Member since 2008 · 339 posts · 52 votes
18y
[i][b]I just returned from three weeks in India yesterday morning. I'll tell you why not to invest in real estate in India if you're sitting on your couch in the US...
[/b][/i]
1) prices are very hard to gauge properly if you're an American. Current exchange rate is about 41 Rupees / USD, but prices have been escalating quickly in India, the rupee has been appreciating, and the legal system is much less reliable than in the US.
2) Most tenants in India don't work off a lease; it's primarily via verbal agreement. While most tenants stay for a long time (low turnover), I have no idea what the case law looks like for landlord/tenant issues. You can't easily peruse case law in India online; it's just not that sophisticated -- or consistent -- of a system. If you're thinking rentals, then think long and hard.
3) If you're looking to buy/flip, then use caution. The only reason a Delhi-based agent would advertise to sell a Delhi property to a US-based investor/crowd is because they believe (correctly) that they can extort a higher selling price (aka a lower investment return) with an ignorant buyer, and that the capital markets in the US will support an overseas investment into Delhi easier (might not be true). Getting India-based investment capital for residential condos is much harder than in the US, even in today's climate.
There is also a strong possibility that there are no good buyers in India for that property at that price + 30% (your investment return minimum for example), in which case the US-based investor will have difficulty unloading.
I'm not against investing in India on principle, but if you're a US-based investor, please don't start that conversation with a salesperson located in Delhi. Start by buying an airline ticket to India and spending a few weeks there. As in most fast-growing economies, there are great investment opportunities, but there are also fewer regulations and recourse if you get screwed so you need to do your own due diligence and CERTAINLY don't rely on a salesperson to fill in the gaps for you.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
18y
Thanks for the information Jeff, quite informative and I agree with you. India has been in the news a lot particularly all the new malls that are being built by one of the largets developers there. I did hear that people there are paid daily and do not have more than a dollar on them on any given day which is why small, low priced items sell so well there. This info came from a TV interview with a Billionaire from India. If I remeber correctly, he is the largest distributor of hair products.
When investing out of the country, there is much more to consider and investigate than just going out of state. A physical trip there would be in most people's best intertests.