Have you ever bought property without seeing it in person first?
Buying real estate sight unseen — and especially out of area property without going there first — is becoming increasingly popular again. For many, it is absolutely needed in order to find value, to land good deals that make sense by the numbers, and to diversify. Some are still scared of taking the leap. Others have been making a mint by doing it for years. Here is how my first sight-unseen deal went.
First off, let me say that if I wasn’t local, I wouldn’t have done this. My partner and I heard of a local real estate auction. There was a total of 65 properties that were being sold off. We were able to get ahold of the list. We drove areas and neighborhoods and compiled a shortlist of about 12 properties we were interested in after driving all of them. No one was able to gain access to the properties in advance. You simply had to drive by, even if they were vacant.
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When I tell you it was a bidding frenzy, it was crazy. There were real estate investors who came from out of state, and some were paying almost retail for some of these properties that needed work. It can be easy to join the frenzy, but you have to stick to your number. It’s easy to join the crowd, but you don’t want to end up getting stuck with a property that you overpaid for and end up regretting it for years.
There was a property on the list that wasn’t formally on there. We hadn’t gotten a chance to drive by it, but we knew the area. We pulled up an image via Google. The image showed it needed work (of course). We ran the numbers and came up with a conservative offer price. We managed to land the winning bid. At this point, my partner and I began looking at each other like, “What the heck did we just do?!”
Why it Worked for Us
Even for the properties that were occupied, we went super conservative on our numbers. We planned for the absolute worst case scenario. We went in with the anticipation that each property was a “gut to studs” renovation job on the interior. Fortunately, that wasn’t the case for any of them.
After the Purchase
We went in and renovated the house. It took a lot less time and money than we anticipated. We were actually approached by several parties to purchase the property in as-is condition due to the upswing of the neighborhood. However, at that point in time, plans were to hold onto it for the cash flow. So far, everything has worked out perfectly.
It worked out for us. We will probably do this again. However, we will only do it when we know the area and values and have run the numbers and made similar offers to ensure we can be profitable, no matter what work needs to be done inside.
What have your experiences been with buying property sight unseen?
Let me know your stories with a comment!