Your Best Advice for Investing From a Distance

4 Replies

I'm beginning to seriously consider investing in rental properties in a city about two hours from me. The purchase prices, cashflow, and ROI that are available there are far better than what is available in my city, which has seen values blow up in the last few years. I also believe in the longer-term upside of the neighboring city and am excited about the potential equity growth there.

I'm curious, for those of you who have invested from afar like this--what single resource or piece of advice will made the biggest impact on my success investing in another city?

@Brian Bandas there is nothing special about investing long distance. You just need a good PM, agent and lenders. That’s really about it.

Go visit the target market, study it and make a decision as what to buy

Originally posted by @Brian Bandas :

I'm beginning to seriously consider investing in rental properties in a city about two hours from me. The purchase prices, cashflow, and ROI that are available there are far better than what is available in my city, which has seen values blow up in the last few years. I also believe in the longer-term upside of the neighboring city and am excited about the potential equity growth there.

I'm curious, for those of you who have invested from afar like this--what single resource or piece of advice will made the biggest impact on my success investing in another city?

 It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

@Brian Bandas

The single thing that will impact your out of area (state) investments is the team you have on ground in the investment area. PM is undoubtedly the most important, but having others that can help and/or check in on the PM is also important. 

I would also highly suggest making it a point to get up in the area as often as possible... especially early on. This makes an impression that you care and will hold people accountable.