New out of state investor - lessons learned so far

[Lillian Mitchell]

Thought I would share lessons learned so far for those who are just starting out and looking to invest out of state because their local market is too expensive. I am just back from a weekend trip looking at both turnkey and retail properties and have some homework from lessons learned! Would love to hear yours as well! (eta - I'm sure some of these are obvious - I'm realizing now how clueless I am and am going to use resources to get smarter!)

1. Learn something about houses. I walk into a house and there is so much I don't see about it! Luckily I was with a great realtor who also buys investment properties, and she was able to point out a lot of things that would be problems from a maintenance / tenant happiness perspective. I was looking at things like, "oh it has nice light and the bedroom is a nice size" while she was actually noticing the water marks on the ceiling. (I'm exaggerating, but still, I really need to work on my investor vision!)

2. "Walking down the street" on google maps is actually pretty useful. I wanted to see neighborhoods in person, and I'm really glad I did, I have a much better sense of the market now, but it was great how closely a google walk down the street matched what I saw. You can actually get a pretty good sense of what kind of neighborhood it is from the lawns, cars, houses on the street in the satellite view.

3. Turnkey seems to really be a great way to go if you are out of state. There were some good retail properties - one of which unfortunately accepted an offer just before mine went in - but even the good ones had a lot of little things to fix that would be hard to do from out of state, unless you have a team in place who can paint, fix minor things, etc.

4. There's a lot you can learn about the neighborhoods by "asking the internets". There are so many forums where people will give all sorts of info about the neighborhood and you'll be able to see a consensus as to what the crowd thinks if it is declining or stable or increasing. This was really helpful in narrowing down neighborhoods to consider.

5. I'm way more clueless than I realized. I own a rental house now (in another state) and have a lot of knowledge about finance, but not knowing much about houses is going to be a detriment. While an inspection could catch major problems, it's a waste of time and money to put offers in and then realize during inspection it's not a good house to buy. Another reason for me to do turnkey until I get smarter about houses. Also now planning to have an actual inspection expert go look at my current rental property and make sure there aren't any glaring things that need to be addressed.

It's a bit more stressful than I thought, but still what I want to do, so I'll keep looking till I have those 4 properties!