I would eventually like to invest in other states. I was wondering if it is a different type of process? Can you just go and invest anywhere?
gici,
you’ve got a number of issues to contend with - but as far as “being able to invest anywhere” - of course you can.
there is ALOT to consider ahead of time. one glaring thing would be your exit strategy for the out of state properties.
knowledge of the market.
accountant issues
attorney issues
local trends
it’s a lot.
By invest in other states do you mean move and start investing in the state you move to?
If not, I don’t suggest investing into other states and becoming an absentee land lord. There are so many things that can go wrong. You won’t be able to check on the properties regularly, it’s going to be a hassle to post evictions, you won’t be able to do the maintenance yourself, management would be really hard, can you really trust someone that is 200 or more miles from you? “Yeah, the property is looking great!” You take a visit and you find that it’s now known as the town crack house. I don’t suggest investing in other states unless YOU LIVE IN THAT STATE.
It’s possible yes, but it takes a lot of experience and work.
Adam
Investing in other areas in which you do not live, create additional headaches and are worth it. The most important thing with investing in an area in which you do not live is you must have people you can trust taking care of things for you. I invest a couple hours drive away from where I live because in my area rental properties just dont work. in the area I am investing in they are very profitable. First thing I did was create a team of people with back-ups I could trust. Then I started buying and so far there have been some headaches but I am running in the black with a positive cash flow every month although nothing to be excited about at the moment will continue to grow as I expand. Just be sure you do your homework dont believe everything you hear and most of all dont let fear of the unknown stop you. Just do it…
What if you have a friend and partner in the other state would you still say that out of state investments are not recomended?
Benjie
About partners…partners create a whole new set of headaches. They generally don’t solve headaches. Only partner is you absolutly have to.
About friends…I don’t do business with anybody I can’t sue. If the next family reunion, or beach party, or holiday will be strained if I sue a person then I don’t do business with that person.
I hate out of state investing with a passion. I’m looking at something that’s 15 mins from me and even that’s a whole different world from my town. I have to do research just to figure of if the buildings are worth what I think they are, in my town I know what things are worth. That’s what I hate about out of state, you just can’t know the market like you know your home turf. Even with this investment 15 mins away I am a little in the dark. Granted I know the town well enough to be 50 steps ahead of an out of state buyer as far as the different areas of town (some is mansions, some is slums) but its still harder than it could be if it were my own city. Out of state you are trusting someone else with YOUR money, YOUR investment, YOUR property. Trust comes hard with me, it takes a long time for me to develop trust in someone…especially with my greenbacks.
Some like partnerships pthers dont. The only way you should partner is if you have an area that is weak such as no money or your credit stinks any weakness you may have.
you must understand the market (I only invest out state in areas I have previously lived)
second, you must assembly a good team. takes a lot of time and really you should only considering doing this for an out of this world deal or you plan to make multiple investments in that area.
I have no problems with investing out of state. I live in New Jersey and since I am just starting out nothing is affordable that is near by. So, I am investing where the properties are undervalued. Texas.
Sure, you need to trust your realtor and property manager, and everyone else in the team. But I am working to build mutually beneficial relationships with them all.
I do not want to self manage a property, that will take up the time I want to spend trying to find other properties to buy. I plan on taking good care of my properties, but that does not mean that I can not let the property managers do it for me.
There is always someone out there who will try to rip you off and take advantage of you no matter where you invest. Due diligence and common sense will avoid most of it.
I’m not afraid of investing in other areas. It’s about about having the right people, systems, and plan. I plan on investing outside of the U.S. in about 5 years, once I invest in other states.
The posters here are right about the headaches and things to look for. My plan includes a lot of travel, especially up front, so be prepared to get some flyer miles under your belt. Even if I had someone that I trusted enough to handle “everything” for me, I’d still want to visit at least once or twice per quarter.
After signing contracts for 4 properties approx 3 hours away from my hometown I have no real fears because I consistently meet with my property managers and local RE brokers,speaking with my lawyer involved…If this was out of state it would be different and I’m kind of a control freak to a degree…I couldn’t imagine buying sight unseen,dealing with all of the above without meeting and looking them in the eye and getting a feel if they are the real deal or trying to play me for a fool…I’m sure there are many successful out of state investors here but at the moment I have not made trustworthy connections ,but I am a rookie like my name says…I’m just not sure I will ever be comfortable investing far away like that but at the same time I own property in Costa Rica for over 10 years but it isn’t an income property and it’s in a enclosed gated community which is patrolled by armed guards and I pay small monthly fee to the people to watch my home…So it’s much different…I don’t trust people handling my money and as many of posts have indicated I’m not very fond of most property managers…So the thought of dealing with a long distance property manager and all the games they are capable of playing is starting to get me aggravated already LOL…The advice I have been given and what seems right to me is to master one’s own backyard…At the very least I’m a short drive away from taking care of things myself and I have very good people working with me and I like it that way…Out of state investing is for the pros,and I’m not that person…
I often speak to a whale RE investor in my area that my father built homes for,he treats me like a son…He has been buying heavily in Cuba for the last 2 years under connections he has made…But he is well established with office buildings/NYC apartment buildings etc etc…He can afford to take pain,I don’t like pain…
Thank you for lowering my blood pressure with this post. I just brought a townhome in the booming part of a city that I’m going to rent out and will get a property manger to manage it. Anybody have any advice on evaluting a good property manager? Things I should look for? I know someone who is a PM in AZ and will ask her too. Thanks
how much do they charge?
how do they handle dead beat tenants?
how many properties do they manage?