How to inspect house when purchasing out of state
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3yQuote from @David Yee:
Hello! I am currently reading J. Scott's The Book on Estimating Rehab Costs. I plan to purchase my first property within the next year but will most likely be doing so out of state due to financial constraints.
How can I go about inspecting a home while out of state? Do I need to fly there? Doing so doesn't seem very cost effective. Thank you!
That's a common method. If you're buying homes that are newer or recently renovated, you may be able to rely on pictures, video, and home inspections to purchase sight unseen. It's not recommended, but it's possible.
I would consider narrowing your search down to several properties, then flying out in person to look at their condition as well as the surrounding community.
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Quote from @Bruce Woodruff:
A licensed Home Inspector will not just do walk-throughs due to liability, and plus they do not know houses the way a GC does. So get a GC to do your quick walk throughs and throw a budget number at you, then if that works, hire a Home Inspector to do his job and inspect the detailed stuff. It's good to have 2 different sets of eyes on it anyway, because they look at different things different ways....Quote from @David Yee:
Quote from @Bruce Woodruff:
Yes, hire a local Home Inspector...that's what they do. They can also recommend a good GC to do repairs (hint - don't hire a Home Inspector who does their own repair work :-)
That's a great tip @Bruce Woodruff! Can I hire a local Home Inspector to walkthrough the property(ies) that I am considering purchasing before I place an offer so I have an idea of the estimated cost of rehab?
That makes sense. I'll try to get a GC to walk the property with me
- Bay area, CA · Member since 2021 · 383 posts · 306 votes3y
The ideal way would be to know a person who knows someone in an entire ecosystem. So thrive for that.
( let me give out-of-norm idea )
If I go find a realtor, then lender, then contractor, than inspector, then manager, can take forever. Or I can find a rich guy investing 10x more money than me in that area, make friends with him or help him with something for free, and now I get to use his entire network!!
We can talk more if you want.
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesStart traveling, start with Arizona...
Quote from @David Yee:
Quote from @Jordan Moorhead:
@David Yee do you know any other areas? I invest out of state but only in areas I know where I have people I trust on the ground.
Hello @Jordan Moorhead. I don't know any other areas very well. I've spent my entire life in San Diego
@David Yee real estate investing is difficult when you're a beginner...it's 10x+ more difficult when you try to do it OOS. There are countless threads on these forums of inexperienced investors trying to start off with an OOS property, and completely losing their shirt.
I'm not saying it's impossible for an inexperienced OOS investor to succeed, I'm just saying it is MUCH harder than investing in RE in your area--this is true for experienced investors, and it's exponentially more true for inexperienced investors.As others have mentioned, you'll need a team on the ground, but more importantly--you'll need an A+ team you've thoroughly vetted that is trustworthy, and that you have properly incentivized to go above and beyond in helping you succeed.
Yes, you will need to learn how to inspect and analyze properties, and you should personally go to the property yourself before purchasing. There are countless issues that would blow up a deal that an experienced investor can spot if they're at the property in person, but that they can miss if they don't see it in person (and you can't just trust that your team on the ground will spot these issues for you). If you want to be a successful RE investor, you need to learn to take control of the due diligence process, and you cannot blindly trust that others will handle due diligence for you (hopefully they will, but ultimately, the buck stops with you). That $500 plane ticket to see the property could end up saving you a $50k mistake!
...and that applies to every area of RE investing--you can build the best team in the world, but ultimately, the buck stops with you. Regardless of how good your team is, you cannot blindly trust that other people will do what's in your best interest, or that they'll operate in a way that's up to your standards.Contrary to popular belief, RE investing is NOT passive--it takes serious work (even if you have a good team managing your properties...you have to mange your managers, and that's a job). ...the people who think it's a "set it and forget it" process are usually headed for a rude awakening. If RE investing were as easy as having someone else manage all due diligence, buying an A-class turnkey over the phone, handing it off to a PM, and then never touching it again as the rent checks roll in, everyone would be doing it, and everyone would be rich!...But, unfortunately, RE investing ain't that easy!
Lastly, no matter what you do, don't get a property in a low-grade area (regardless of how good the cashflow looks on paper). Many inexperienced OOS investors get lured into buying properties in D class areas because the cashflow looks great on paper, and then they get seriously burned when they discover that no PM will put in the significant effort it takes to correctly manage a property in a D area for such little return...then, they're stuck with a property nobody will manage correctly, that is a massive headache & liability, that nobody wants to rent, and that nobody wants to buy... don't fall into that trap!
Do plenty of homework, and become the central driving force of your due diligence process before pulling the trigger.
Good luck out there!
- Bay area, CA · Member since 2021 · 383 posts · 306 votes3y
Maybe invest with a high-quality turnkey provider who cares about his reputation and you would never have to inspect :))
I am from California and I invest in Florida.
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