Out of state, sight unseen investing

Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes

BP,

Kinda freaking out a little, just made my first offer on a property from 700 miles away in a town I've never been to, on a quadplex I have no intention of ever seeing in person. To clarify this would be my first investment property. Basically, I'm taking a leap of faith, using lessons learned in "Long-Distance Real Estate Investing" to hopefully build a passive income stream.

Hope my research pays off.

Basics on this first deal...

Quadplex (Four x 2 bed/ 1 bath)

Asking 170k

Offer 155k

Rent per month: $1640 (market supports $1800-2000)

I'll try my best to provide updates on my huge success (or major flop)!

[email protected]443-812-0357

Schwartz Realty Group5116 Reviews

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Ruthber P.

Real Estate Investor · Belvidere, IL · Member since 2015 · 12 posts · 11 votes

Greg:

First, do not get discouraged by anyone, someone else is doing it so you can, not going to be easy.

If not done already I suggest to look into this:

Enforce that PM uses a great website for rental screening, ones with a background check and choose the best tenants possible.

Review you leases to close any pitfalls and enforce the lease to the T.

Keep the units in good shape and keep extra cash reserves ( fixing + trip expenses )

Tiger than normal lookup on the PM ( have second PM line up ), vacancies, unit showing costs, repairs, fees, etc, require a once a week normal operations report and a once a month full operations report.

Family, friend on virtual assistant that regularly drive by the property and reports to you, or if cash flow allows and deem beneficial you can install security cameras and remote view activity on the property, nowadays there are lots of options.

Check if feasible to get a home warranty plan for the units so some pain issues are self-managed by the tenant via a phone call to the warranting company

In which city/state is the property?

Best of luck.

RP.

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Wendy Schultz
Property Manager · Wisconsin and Florida · Member since 2017 · 346 posts · 227 votes
8y
@Gregory Schwartz First of all, thank you for your service! I put an offer in on a property sight unseen recently. It's closing next week. I had an inspection contingency in the offer and then actually attended the inspection. I also had my realtor whom I had gone on a number of showings to other properties go through it and take video. She knew what I was looking for so I trusted her.
A few things I would suggest is to put in an inspection contingency, have a realtor you trust to help make sure the transaction runs smoothly and have someone you know attend the inspection to be your eyes and ears. They can also meet in person with contractors that you already vetted. You've done your research on Biggest Pockets. Don't stop researching the market you're choosing to buy in.
As others have said, it can be done. It can be risky. You could be the biggest hero or biggest fool depending on the outcome. Good luck! Keep the faith! On the risk scale, this will probably seem easy compared to the Marines.
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Gregory SchwartzBusiness Member
OP
Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
8y
@Account Closed yes I've seen pictures. The rent is for all 4 units (500/unit).
I think the most interesting thing about the comments so far is how everyone's past and current situation drives their comfort level with my current plan. Maybe in 10 years, when I'm a seasoned investor who has survived the next recession, I will look back at this thread through a different lens. But today, for where I'm at in my buy and hold adventure this is the best move.
I really wish I had more of an update than this for everyone, waiting is the hardest part.
[email protected]443-812-0357
Schwartz Realty Group5116 Reviews
Website View Page
1 Reply
Gregory SchwartzBusiness Member
OP
Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
8y
@James Byrd so far your comment has stung the worst, labeling me as a Hornet driver. I prefer the slower lower life, 120kts 100ft. You can have your dog fights, I'll stick to fast-roping Marines and door gunners. If I had to guess, you're a single seat single engine fighter pilot... F-16s?
@Wendy Schultz thanks for the comment, yes I have an inspection contingency in the offer. I've had to walk away from more than one offer as a result of various "gotchas"
[email protected]443-812-0357
Schwartz Realty Group5116 Reviews
Website View Page
1 Reply
Rhonda Hall
Rental Property Investor · Harvest, AL · Member since 2018 · 1 post · 0 votes
8y
Hello, I’m in the Huntsville Area so if you need any assistance let me know!
0 Reply
Account Closed
Investor · Seminole, FL · Member since 2016 · 94 posts · 41 votes
8y
I haven't done anything sight unseen but once while traveling with work I bought a place in GA. I live in CO. I had enough time there to look at a few places and get the lay of the land, I knew there was a company coming to town and 5000 employees were on the way. It was my first investment and it wasn't much of a deal but on a 15 year note had rapid debt pay down and years later was able to refi and purchase a mulit-family. I still have the house and it appreciates every year - I have a great property management company after firing one that was giving me the run around. I'd say good management is imperative to making the deal work. Sight unseen I'd say it would be great to have an amazing local realtor who is trusting and knows great people and great management options. If that deal was out here in CO it would be scooped up in minutes.
1 Reply
Randy Dickerhoff
Mount Juliet, TN · Member since 2017 · 32 posts · 5 votes
8y
if you have read David Greens the book on long distance real estate investing I suggest you give it a read. I believe you will be successful! as long as you do the work and put the effort into diligence and your team. we live in a world where we can virtually be anywhere at anytime. You got this! excited to hear about your success
1 Reply
James Byrd
Realtor · Destin, FL · Member since 2018 · 38 posts · 22 votes
8y
Gregory Schwartz is it that obvious!? You shacked it - Vipers. I don’t have the balls to fly in your arena.
0 Reply
Shawn Ginder
Investor · Lititz, PA · Member since 2015 · 36 posts · 13 votes
8y
We also bought from far away, from Europe buying in central PA. Like others mentioned the team on the ground will be key to your success. Have to have a solid team in place to run things for you and good communication with them.
As noted by others, the deal has tight margins, so if this offer doesn't come together continue to shop for bigger margins.
The other thing to watch for is location, get someone you trust with eyes on the ground that knows the market, ie. a property manager who understands the street you are buying in.
Our advantage we had walked the property two years earlier, so we had an idea of what we were getting, having a home inspection will also give you the information you need to evaluate further, and if you can have a property manager walk the property can give feedback will also help.
All the best.
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William C.
Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
8y
Gregory Schwartz surely this can’t be a cash flow play at $500 a unit, can it? Debt service, taxes, and insurance alone must equal just under the $1600 the current owner is receiving in rents. After cap ex, maintenance, vacancy, management, etc, etc I cash flow roughly $1000/month, with $2500 more in revenue. Maybe I’m missing something? Do you have more detailed numbers that your using that show money left over each month for you? I do believe that doing a marginal deal is better than no deal at all, even if for the knowledge and experience alone. But maybe there is a way to eek a even a small profit each month in some other deal? Any way I slice it the cash flow is negative, unless of course nothing ever needs to be replaced, no Tenants ever move out, and nothing ever goes wrong, and you manage the thing yourself from long distance.
1 Reply
Mihir Bhimaraju
Investor · Indianapolis, IN · Member since 2016 · 232 posts · 133 votes
8y
@Gregory Schwartz I bought my first 4 doors sight unseen. I was back home in India and I made my offer based on 2 reasons. 1- I had a good team, both the agent and the PM are efficient and highly capable and 2 - numbers worked.
I'd freak out only if you didn't have a decent team to work with. I'm sure you can connect with investors in the region of the property and get their take on the area or maybe even do a drive by. Let us know how it goes.
0 Reply
Alex Sabio
Investor · Fontana, CA · Member since 2017 · 95 posts · 59 votes
8y
I’ve done this several time and it’s worked out great for me, it takes the emotion out of investing. The time when I did go look at the house (used my emotions instead of just numbers) I almost lost everything!
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Kyle Reynolds
Las Vegas, NV · Member since 2017 · 20 posts · 8 votes
8y
Sounds as if you've done your due diligence and worked the numbers and rent potential. Congratulations; its great news. Looking forward to hearing about the project's success in due course.
0 Reply
Mel Hayes
Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
8y
Originally posted by @Gregory Schwartz:

BP,
Kinda freaking out a little, just made my first offer on a property from 700 miles away in a town I've never been to, on a quadplex I have no intention of ever seeing in person. To clarify this would be my first investment property. Basically, I'm taking a leap of faith, using lessons learned in "Long-Distance Real Estate Investing" to hopefully build a passive income stream.
Hope my research pays off.
Basics on this first deal...
Quadplex (Four x 2 bed/ 1 bath)
Asking 170k
Offer 155k
Rent per month: $1640 (market supports $1800-2000)
I'll try my best to provide updates on my huge success (or major flop)!
Trust your research, trust your numbers, trust your team, keep in contact with your team, you'll be fine. Scared people will tell you that you're crazy, that you made a mistake simply because they are careful and only know how to do things one way. You're obviously investing out of state because you've done the numbers in your area and your area may not be good for deals. So you've already done more than most people will ever do. Keep going man.
0 Reply
Michael Tempel
Property Manager · Minneapolis, MN · Member since 2014 · 380 posts · 167 votes
8y
Greg, Short answer from personal experience is “you showed up”! I cannot tell you how many deals I have put under contract while everyone else was paralyzed by analysis. Many investors never start because they think they need “more knowledge or experience”. To date, every deal I did this with has exceeded 25-60% returns or more (recently had a 157% ROI). The market helped, but if I would of waited the properties would of gone to another buyer paying more....plus brokers love me because I actually perform quickly...leading to more and more deals. Only difference is I knew the landscape, but at the same time you are comfortable with your decision and pushed fear aside and got in the game. To me that is the biggest obstacle I see so many potential investors make...fear of jumping in. 100% of 0 is zero...period. You have to show up and get in the game, which you did. Risk and reward is real, I would rather have massive success with a few failures than 0 or a very modest return by window shopping. The successes far outweigh the failures. Work backwards on goals and remember life is short... Of course inspections, due diligence and viewing the property, even by me are highly recommended and normally necessary in all cases. Congrats and best of luck!
1 Reply
Alpesh Parmar
Investor · Dublin, CA · Member since 2016 · 344 posts · 228 votes
8y
Gregory Schwartz I have done this too and learned some lessons along the way. Key is to find independent home inspector and property manager to make sure property is in good shape and in a decent area.
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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
Cash flow, tax benefit, maintenance fee, property manager fee (unless you want all 4 vacant DIY).
Have realtor shoot film, video, check local unemployment stats, major employers, income, crimes etc.
4 plex must be in urban not rural. I assume each one is rented for 1640 not all 4?
Huntsville, Alabama appears to OK location. Price seems to be good so downside $ is less.

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Jed Devine
Investor · Charlottesville, VA · Member since 2016 · 34 posts · 113 votes
8y
I just did the same, now under contract. I was lucky enough to have a colleague who is familiar with the area and had systems in place I could utilize. The main reason I did it was that I am tired on sitting on the sidelines...I do have 1 local rental. I just listened to one of the BP podcasts that mentioned you can’t learn to ride a bike by reading a manual and that resonates with me. The numbers look good, done what I can and if this place tanks, it won’t hurt me that much. Best of luck!!
0 Reply
Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
8y
Originally posted by @Gregory Schwartz:
@Account Closed yes I've seen pictures. The rent is for all 4 units (500/unit).
I think the most interesting thing about the comments so far is how everyone's past and current situation drives their comfort level with my current plan. Maybe in 10 years, when I'm a seasoned investor who has survived the next recession, I will look back at this thread through a different lens. But today, for where I'm at in my buy and hold adventure this is the best move.
I really wish I had more of an update than this for everyone, waiting is the hardest part.
Just curious. Why not invest in Raleigh? It's a beautiful two hour drive if ever you need to make it. Much more practical if you plan on being an investor.
They are starting up developments in Pyongyang, NK now "New high-rise, high-tech apartments under development in Pyongyang NK and there are some smokin' deals, but I suspect I shouldn't give you any ideas. ;-) (Just kiddin' in case someone can't figure that out.)
Congratulations on at least taking the step and committing. Good show, ol' chap.
0 Reply
Paul B.
Rental Property Investor · Dallas, TX · Member since 2015 · 501 posts · 504 votes
8y
I believe the OP has only made an offer....all of this is moot if he doesn't get the property. But still, lots of good advice on here. It's up to him to decide which advice to follow, since much of it is conflicting.
0 Reply
Harinath Pottam
Los Angeles, CA · Member since 2018 · 15 posts · 11 votes
8y
I have invested in 2 duplexes and one 4-unit properties, unseen. So far is OK. The way I consider investing Out of State is by having a good Management team. I preferably choose those locations, where I can find an affiliated Management company. The affiliation is thru the RE investment groups like, in CA, Realwealth Network and/or MarshallReddick etc. An additional vetting by them may go long way in establishing a good team for the long haul.
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Sassan M.
Member since 2018 · 4 posts · 1 vote
8y
@Gregory Schwartz congrats on submitting an offer! It sounds like you've made up your mind and are excited to plunge headfirst into your first rental! With regard to purchasing rental properties in a different state site-unseen, there are alternative methods in doing so. One method, which I'm looking into for myself, is using a platform like Roofstock. The company helps sellers of rental units match with investors. They also streamline property management and financing.
Best of luck!
Sassan
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Tom O.
Chicago · Member since 2018 · 214 posts · 165 votes
8y
Matt K. What is the Morris Invest ongoing disaster?
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Steve K.
Honolulu, HI · Member since 2017 · 247 posts · 315 votes
8y
Originally posted by @Tom O.:

Matt K. What is the Morris Invest ongoing disaster?
@tom o
enter "morris invest" in the search box (click on magnifying glass on the upper right)
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Will Wiggins
Military Officer · Pensacola area, FL · Member since 2017 · 35 posts · 14 votes
8y
Originally posted by @Mel Hayes:
Originally posted by @Gregory Schwartz:

You're obviously investing out of state because you've done the numbers in your area and your area may not be good for deals. So you've already done more than most people will ever do. Keep going man.
Not even close Mel. If he had done his research he wouldn’t be investing out of state. NC has lots of deals FAR better than his current offer with no where near the risk level attached to it.
@Gregory Schwartz, honestly brother I hope your deal falls through. Send me a message and we can talk about why offline. It has nothing to do with Huntsville, the property you’re looking at, or out of state investing in general.
Semper Fidelis,
-Seats
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Frankie Woods
Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes
8y
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!
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