I am a 25 year old newcomer to the world of real estate investing. I am focusing on the market in Texas, particulary San Antonio. With the potential for cash flow and appreciation it is pretty enticing. However, I am a little nervous about buying a house that I won’t see more than one or two times a year. Does anyone have any advice on out-of-state investing? What are the risks? Is it worth the risk?
<<Does anyone have any advice on out-of-state investing? What are the risks? Is it worth the risk?>>
I don’t even invest outside the Parish that I live in…and won’t. I want to be able to see my investments and see how the tenants care for them/maintain them…I won’t delegate that responsibility (unless maybe I was physically incapacitated)…
But, that’s me…you’ll see that other opinions will vary.
If you’re out of state, you need to have some people you really trust to handle your properties. It’s usually best to start by investing near you so you can get used to the various issues. After using property managers for the past few years, I am going to start managing my own properties again. I got tired of the manager charging a lot for repairs and not getting tenants out fast enough when they didn’t pay on time.
So…if I am going to buy properties out of town, I’d be ready to fly out there for emergencies and I’d also want to have some trusting relationships with an exellent manager and contractors prior to purchasing.
There are risks when you invest. Period. Whether in your back yard or 2000 miles away. It’s all about your knowledge of what you’re buying, what your strategy is and understanding market cycles. Every market has multiple cycles that are/can be monitored on easy to get, hard data.
That being said, investors all over the US and WORLD are investing outside of their back yards in places like FL and AZ. Especially when they find real estate that performs like an investment but also has usage privileges where they can use it as a vacation property at times. When it comes to investing outside of your back yard, I find good local professionals who make a living locating the deals in the state/locale I want to invest it. A good bird dog, realtor, etc. are worth everything they make. But a good one is the key.
A good company or professional should be able to provide you enough info and due diligence to help you get comfortable making that decision.
i’ve invested 10 miels away, 100miles away and 3000 miles away. Long distance takes more work as you have to build team of people; this takes time. Second, you MUST understand the market; otherwise, you are likely to overpay. I only buy in places I have lived previously or I know someone really well that lives in the area that can explain market forces, trends, etc, etc. Most realtors will not give you enough info to make intelligent decisions on what is a good deal. With that said, I use realtors in the areas I’m looking but I depend on my own market research.
I started out local however and only expand after get a few years of solid experience.
currently my closests investments are about 950 miles away and are doing exceptionally well. it does take a lot of work though. people will try to screw you over[in terms of cleaning and fixup] so make sure you have someone you can trust. I did this by finding people and promising them 50 houses[through me and my investor network] so if they mess up and try to screw us over, we’ll give someone else our business.
I bought 2 homes 2500 miles away and the property mngr did screw up. so he didn’t get to manage another 48 homes!!!
its not difficult. and if you live in a place like California, investing locally just doesn’t make any sense unless you’re going to get yourself a rehabbing job or something.
I agree with everyone 100%! Plus, when you invest in out of state properties there are certain rules and regulations specific to that state that you need to be aware of. I have a few out of state properties (areas I’ve never lived in…) and it was a good start. I have a property manager for one property that is a few years old in a blue collar neighborhood. I checked the property manager out, called references, and did my homework. We have a good relationship and he informs me on local laws and things I need to register for in the state plus other upcoming opportunities. I do have to fork over 10% of the rent each month though.
The other property is a new build and has a 1 year waranty. I feel comfortable that whatever arises will be covered. Since it is a new property I don’t expect much to break down right now. With a lockbox secured on the outside, renting it out is not so bad - proper checks for the applicants, and some contacts in the neighborhood help too. But it is a lot of work and very tiring.
Whatever you do always consider the exit strategy… and the key is to have a good network, network, network. Good luck!