Investing Out Of Your Market

Real Estate Deal Analysis & Advice
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Investing Out Of Your Market

Richard Adjou
Real Estate Agent · Montgomery Village, MD · Member since 2014 · 39 posts · 8 votes

I just received a message from another investor looking to sell a property in the NJ market and just out of curiosity, I wanted to get the opinion of some folks who analyze deals outside of their market. I have no plans to invest outside of my market just yet but I want to refer that lead out to someone I know out there. Trouble is, I don't want to send something that has been recycled and/or may not even be worth their time. And judging from some pics of the property, there would need to be some some updating repairs done at the very least. 

So here's what I did and I would love some feedback or tips for improvement:

I did a quick Google and Property search to see what I'd come up with and get an idea of the market. 

  • Zillow has the property listed as pre-foreclosure
  • Zestimate is roughly $43.6K
  • Tax assessment of the property is $47.4K. 
  • Recent sold property along the same street are $17K, $18K and $20K
  • Price history show the property being listed 3 times this year around $16K and $17.8K and not being sold 

Based off of all these findings, I figured either it wasn't really a good deal or wasn't being priced right to wholesale. 

Thoughts? Advice?

Thanks! 

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  • Trevor Ewen
    Rental Property Investor · Weehawken, NJ · Member since 2014 · 1k+ posts · 704 votes
    11y

    @Richard Adjou 

    It's hard to take a stab at analyzing the deal without knowing more specifics, and what you are looking for in your deals. Obviously, everyone is unique, and I would hate to prescribe a yay or nay for me, that could be a slam dunk for you.

    The only advice I can give to investing out of your market is: Make sure you have a team/people in the area. If you don't have that, it mine as well be Antarctica in my book. People can give you perspective, services, an eye on the property, whatever you need. 

    I refuse to go into a market alone without some contacts on the ground.

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  • Richard Adjou
    OP
    Real Estate Agent · Montgomery Village, MD · Member since 2014 · 39 posts · 8 votes
    11y

    @Trevor Ewen that's great advice, so if I don't have that additional perspective then I'm just going to stay away. I was hoping to provide a good lead to someone I know locally and maybe build a business relationship from there. 

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  • Trevor Ewen
    Rental Property Investor · Weehawken, NJ · Member since 2014 · 1k+ posts · 704 votes
    11y

    @Richard Adjou 

    Depends on your risk preference. I live and invest through a framework that keeps me comfortable and able to sleep at night. If I go outside of my own framework, I mine as well take my money to a casino. You have to measure your risk tolerance and decide how loosely you are able to know a market.

    There are folks on the forums who have had great success just buying and holding in unfamiliar markets. I just think it takes a special type of person with a risk-on attitude, and the ability to add a diverse inventory, quickly.

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  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    We analyze deals outside of our primary market all the time.  Rules of thumb:  Boots on the ground team in the secondary market that we trust; primarily to verify the costs to renovate. We never use Zillow Z-estimates or tax assessments to determine value.

    Regarding contacting the local person about the lead:  Contact that person and have him do the due diligence work @ a local level.  Continue to build the business relationship.

    312-681-7487
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