How difficult is it to get started in area far from where I live?

[Treyan Doss]

Hello everyone,

This is my first post at BP, so bear with me. I live in Palm Beach County FL and am intimidated to buy my first investment property of any sort in the area due to there being such a strong market. This is leading me to look all around the country on loopnet.com and I see that many rust belt areas have much cheaper investment options. I noticed Cleveland and Rochester are loaded with cheap multifamily, but I have never stepped foot in either city. I am looking for 2 answers: is it wise to begin investing when the property is far away but less risky financially, and what are effective means to ensure an investment is in the right area. Thank you for your time and help!

Trey

[James Wise]

Originally posted by @Treyan Doss:

Hello everyone,

This is my first post at BP, so bear with me. I live in Palm Beach County FL and am intimidated to buy my first investment property of any sort in the area due to there being such a strong market. This is leading me to look all around the country on loopnet.com and I see that many rust belt areas have much cheaper investment options. I noticed Cleveland and Rochester are loaded with cheap multifamily, but I have never stepped foot in either city. I am looking for 2 answers: is it wise to begin investing when the property is far away but less risky financially, and what are effective means to ensure an investment is in the right area. Thank you for your time and help!

Trey

 Welcome to the site Trey.

When you are buying an investment property out of state it is paramount that you do a few things.

Get a 3rd party inspection - There is absolutely no substitute for a completley unbiased trained professional spending 3 hours going over the home with a fine toothed comb.

Get an appraisal - Bonus points if you get the appraisal because your lender required you to do so. The bank isn't going to let you burn their money so you know you are getting the property for a fair price. On top of that the ability to use leverage aka Other People's Money (OPM) is one of the biggest benefits to investing in Real Estate. It is one of the things that separates this from all other investment vehicles. You buy a property using someone else's money (bank) then pay the loan off using another persons money (tenant) best gig in town if you ask me! 

Hire a Property Manager - Don't be penny-wise & pound foolish. Anybody that attempts to manage an asset from across state lines is missing the big picture. Generally speaking folks are drawn to Midwestern markets because of their low prices. Which often leads people into investing in non prime Real Estate. These are tough assets to manage even when you are local. We run a portfolio valued above $50 Million & the tenants still give us trouble daily. It's just a fact in this business that your tenant base is going to be tough. There really isn't any way around that and attempting to go to battle at an extreme disadvantage like being out of state with no on the ground network is financial suicide.