Out of state, sight unseen investing

110 Replies

I've bought sight unseen multiple times.  But when I was first starting, I went thru the entire process locally with my team to ensure they were the right fit.  The team is everything ... even more so when investing from a distance.  I would highly recommend going out to the location and seeing things first hand on your first deal.  This will also provide some valuable insights to help your growth as a RE investor!

It's  not really sight unseen when you have people looking at it on your behalf lol...

No updates yet, still working through the offer/counter offer process.

@Rhonda Hall thanks, I'll definitely take you up on that offer. The Huntsville BP members have been super helpful, which makes this process that much easier.

@William C. I ran the numbers through the BP rental calc and came up with 8% cash on cash (7% Vacancy , 10% repair, 11% management)

@Mihir Bhimaraju @Alex Sabio @Kyle Reynolds @Mel Hayes @Michael Tempel @Jed Devine Thanks for the vote of confidence

@Mike M. I have had my eye on the Raleigh area, great town but haven't found much in the way of small multiplex that hit my numbers

@Gregory Schwartz Very interesting.

You are 25 miles to Jacksonville NC and 35 minutes to Wilmington NC. I am curious to learn what prompts you to not invest in Jacksonville NC? Very curious, actually, since I've put in offers on MF property there over the years. 

Here are census numbers (columns copied via MS paint to show side-by-side) for Huntsville and Onslow county (couldn't find Jacksonville NC in 3 minutes or less). Seems like, numbers-wise, similar size places but I know nothing about AL. 

@Chris Martin I have made multiple offers in the Wilmington area with no luck. Jacksonville makes me nervous, there are a lot of very inexpensive homes that were built in the last 5 years driving rents extremely low.  In Jacksonville, the 2 bedroom apartments are usually rented by young Marines who have to live on base but want a crashpad for weekend shenanigans. Maybe that's over thinking it but that was my logic. 

One thing about prop management, a lot of them take big chunk of first month rent in addition to the 10 or so % monthly.  They'll also take a chunk for renewal... I've always been a fan of using 75% of first mo + 10% for 11 months and doing lump sum vs monthly fee for calc.

@Gregory Schwartz I think you've undersold Jacksonville. 

Rents are driven primarily by BHA from what I've seen. 

I've screened probably 200 people for my Jvillle rentals (2/2.5) and not once have I seen an unmarried Marine looking for a crash pad. Most of them have gf/bfs they stay with.

@gregory Not that it matters, but I'm not sure what you are trying to do. The original post IDed a quad (still a 1-4 family from a financing perspective) vs. single family residence (SFR), so not sure if that is important to you or not. I've seen places in Jacksonville rented by <22 YO Marines and I am not in that market. In my world it's a matter of getting the PM on board to select and manage the right property and the right tenants.

On paper there is a J'ville quad (MLS) that will sell for (probably) $27,500-$28,500/unit and the rents there are $550/unit. I don't know the history of that VA owned property, but those numbers would be ok for me if the PCR is reasonable and I get buy-in from a local PM. I see these from time to time, but, honestly, would rather buy out the whole street of quads (most owned by out of towners) and have unified management handle all the properties. This strategy is hard to do in an extreme bull housing market like we are in. I have done it (not in Jacksonville, but Greenville and Raleigh) but it is a ton of work. I am completely off-topic here.... 

But I find this fascinating.... You are nervous about Jacksonville where PMs can tailor your investment to what you really want and you can talk to them face-to-face... yet you are confident with a sight-unseen purchase with people you've never done business with. 

To me it's clear from your posts that you have a good handle on quantifying your risks and rewards. I don't think there are right or wrong answers. Your path is your own. I truly respect that, since I have mulched my own path (where others said travel was impossible) on occasion.

@Bill F. I will be the first to admit that I developed a distaste for Jacksonville based mostly on preconceived notions and not on solid in-depth research. I should take my own advice and do my research.

@Chris Martin you make some really compelling points. I've made offers in the past in Jacksonville with no luck but will bring it back into my scan. 

Update: After a weeklong back and forth with the seller the deal fell through. Long and short I held to my numbers (8-10% cash on cash) and the seller was unwilling to budge on his asking price. Thank you to everyone who commented on this post. I learned a lot over the last week. 

Next time drop your offer by 1500 that should cover your trip and inspection haha.

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