Investing in Out of State Markets

Our focus is multifamily, we mainly focus out of state, it provides us better opportunities to find assets that meet our investor return marks, also it allows us to get in at a point that we can find properties at a cap rate that stands to be affordable and approachable for us, but being out of state and operating in a state we don't live in means we're not a hundred percent versed with every in and out of the market where we're learning.

We can pull all the data that we want but if you're not there in the market you can end up lagging behind or doing yourself a disservice because you may not know some of the fine details, for example from one street to the next can prove to be very different, you could be one Street over and all of a sudden you're in a war zone. You could be on the opposite side of a block depending on what side you're on one could go to a better school system. There are many different things that can transform a property that looks great on paper into a bad property once you actually acquire it.

For certain markets that we focus on it's been very important for us to either have someone locally that we know or a team built in that market through other investors, property management companies, insurance brokers and lawyers - any of those people that can help us fully understand the market. It comes down to having the quick call and saying "hey we've found a property in this area, we're looking at this" then saying why we like it. The person you're speaking to doesn't have to be looking at it from a real estate perspective but at least it will give you some context of the area. Are there new restaurants opening up? are there people moving downtown? is there some new building/new construction being built there? what do they know about that area that really makes it stand out or something that would make you want to stay away? 

You have your brokers, you have your property management companies, your attorneys, your appraisers that you're doing business with on a daily basis but you need to speak to those who speak candidly about what's going on. They need to talk about the neighborhoods, talk about the submarkets and talk about if it's the kind of place where you would feel comfortable walking down the street at 10 o'clock at night.

Be sure you know your market metrics, it is an important component, you can have "shiny object syndrome" where you find a property in every market that may look great but if you don't know the market it would be like investing in your town and then trying to invest in a town half an hour away that could be completely different if you don't know your metrics.