How risky would it be to invest in another state without actually viewing the property? For example, If I live in NJ and a property comes up in NC, what is the best way not to get screwed. Is a physical inspection necessary by me or can I hire like a local realtor/inspector to check it out for me?
When it comes to my own money I trust no one but myself…just the way I am.
I’m in the same boat as you are. I’ve asked this question and people have told me you need to find someone you can trust. If you don’t know anyone, get referals from other investors in the area. Most important, do your research on that person(s) you will trust. As for me, I plan to visit at least one time before I pull the trigger. Then I will leave it to a property management company. I may visit the property once a year. Of course there are risks, but isn’t that part of the game? Just learn to minimize the risks.
I am also in NJ, but invest in Buffalo, NY. However, I am familiar with the Buffalo area and still have a lot of family up there. I would not invest in a place where I did not know the neighborhoods, local economy, etc.
Even with my upstate investments, I spent a lot of time there, as well as travel time back and forth (6 hr. drive). I also have property managers who take care of most stuff for me. If I had to deal directly with the tenants, it would drive me nuts!!!
On the plus side, I bought a 4 unit apartment for $53,500…
But can you buy low enough and pay a property management co. and still make a profit?(more than $100 month)?
Here’s how it breaks down for this particular property:
Gross monthly rent: $1700 (That is with one apartment under market)
Expenses (monthly amount):
$114.75 City Taxes & sewer rent
$22.92 County taxes
$170.00 Property management (10%)
$85.00 vacancy allowance (5%)
$85.00 maintenance (5%)
$500.00 HELOC Payment
$22.75 Garbage Fee
$532.58 Monthly positive cash flow ;D
The important thing in Buffalo is to make sure the tenants pay their own utilities- the heating bills can kill you…
How much did you have to put down for that?
Very GOOD . How is the management company ? How much hands on do you have to do?You can really buy property that you can mortgage (heloc) including T&I for $700 that produces $1700 income. I was in Buffalo last year poking around and those potential deals seem to have been in VERY bad neighborhoods and needing complete rehab to start. Am I wrong? I hope that I am cause Ill be back if I am.
We originally purchased with funds from the HELOC on our personal home, so essentially we paid cash.
We refinanced the investment property with a HELOC after a year- it appraised at $72,000 (yay!) so at 90% we pulled out a little over $64,000, which covered the acquistion cost plus what it cost to get three apartments and four hallways painted and fixed up.
The rates on the HELOC have been going up, so I may refinance again to a standard 30 year fixed first mortgage… :
what was the origional purchase price ? Was it bank owned ? Hud?
My manager is a single guy, not a company. He was the person I picked to paint my property- we got along, he is meticulous and he indicated he was interested in managing the property, so that is how it worked out. He is also a bit of a handyman, so he does the minor repairs, which is a blessing. I do not have to do much in terms of management.
You really need to know the neighborhoods in Buffalo, since the character of an area can change street by street. Stay away from the East Side! This building is on the West Side, on a street that is still pretty decent, not too far from Buff State College. Yes, a lot of the buildings will need a lot of work, but there are still quite a few buildings that have been in the same family for 40+ years and are in decent shape.
Another crucial factor is that this is a 4 unit (actually two 2 unit buildings on the same lot). This arrangement made getting the appraisal difficult (finding comparable sales), but has made all the difference in the cash flow. The four unit actually only cost a little bit more than a 2 unit would in the same area!
I looked at a LOT of properties to find this one… In addition this was being sold by the heirs of an estate (there were 6 of them), who were not interested in being landlords. I think being able to jump on the good deal with cash just after it hit the market made a big difference here- no financing to fool around with.
Was listed for $59,000. I offered $50,000 cash. We settled on $53,500. I got $1000 credit at closing because the listing agent had mis-stated one tenant’s rent (he quoted what the apt could rent for, not what the tenant actually paid).
Owned by the 6 heirs of the last owner’s estate- they kept one apartment out of four rented to cover taxes, etc. but did not want to be landlords. Lucky for me!
Agree with Rich_in_CT
One important thing to remember about investing out of state is, WILL the cashflow be enough to take on the headaches that can occur…You do not want to kill all your cashflow because you need to hop on plane to manage the property or take care of certain issues. Personal, if you are not pulling in around $500-1000 a unit then its not worth it for out of town deals unless its pre-construction…
Also Pittsburgh and detriot have very cheap multi-family but you need to be careful with the areas as well…Excellent cashflow cities…