Investing out of town?

I have been somewhat intrigued as to how the “big timers” or whoever make the transition from their own backyard and begin successfully investing in cities where they do not reside.

So my question to you all is; how do investors make the transition from their own backyard to successfully start investing in other cities?

What needs to be present in order for them to make such a transition?

I believe the only way to successfully invest out of state is when you have someone on sight to represent your best interest in the investment. This could range from a management company to a single individual you do business with. Either way, do your due diligence.

GooD LucK! :beer

They first know why they want to invest in that area. That requires alot of research and advice from local professionals. And you must have someone local who is looking after your properties. If you can show that you’re a serious player your local person will want to keep you happy.

My parents live near our investment property. My dad is retired and can handle small things that come up. I have people on my team in that area that I trust. I also have half of my building filled with long term tenants who are very responsible. We still get calls from time to time, but it’s been manageable. I go over and do some work on the building when I’m in town visiting family. If it wasn’t for my dad, I would have to go with a property manager.

I did my first out of state deal in 2003 and have been investing out of state ever since.

There were many learning experience along the way, naturally.

Here’s a summary of what I’d suggest you do in preparation of your new venture:

  1. Know what it is you’re trying to accomplish (what is your exit strategy).
  2. Find a market where the numbers make sense based on your exit strategy.
  3. Start calling realtors, contractors, home inspectors, property managers, etc and look for people who have a substantial amount of market knowledge, have worked with investors and are hungry for your business. When you do this, understand that you may make ten calls before getting one realtor who calls you back. When you know this going in, you don’t have to feel discouraged if it feels like a lot of work…it is in the beginning.
    Another short cut for building your power team is to find the local investing club and get on their website (or call if no website) and ask if they have a list of preferred vendors. Oftentimes, these people are used to working with investors.
  4. As soon as you find ONE good power team member, ask them for referrals to other team members and start calling and interviewing them as well.
  5. I didn’t used to do this, but I’ve found in the last year, if you can schedule a few days in the market, having made these phone calls ahead of time, allows you to go and meet with potential team members in person, get to know the different neighborhoods and start locking things down. Bring a map and start making notes of the areas you like.
  6. When you leave, you need to all of the people in place so that you are the conductor of the whole thing via phone. When using a contractor, make sure you have an independent third party who reviews the work before sending funds cross country.

I hope this helps to get you started. Local team members are invaluable for information on good neighborhoods, etc. Just plan on spending a good number of hours on the phone, the investment will pay off.

Take care,