When buying properties in another state, how do you analyze and view them?

Question

When buying remotely in Texas, where I have I have enough properties in several cities, I use my maintenance man to work up an estimate and I know comps for these towns. I also use them to show my houses for me (though this is less than ideal, I will admit).

But I am thinking of buying houses in Detroit and other out-of-state cities - and need to find a way to analyze a house for such factors as neighborhood, rental rate estimates, condition of other homes on the block, estimated repairs, and other metrics.

Any ideas?

Obviously  I can't count on most wholesaler's advice about the properties-- and based on the forum posts I have been reading, it seems that many other people  (even on BP?!?!) are less than open with all details about a property or have ulterior motives when describing profit potential of properties..

Thanks.

Jon Holdman · Answer

Before buying far away you must get on a plane.

Robert Piller · Answer

Bill Gulley  You are right--the grass does always seem greener on the other side. Been doing Texas properties for 30+ years.

@Troy Fisher  Seems like putting too many people out for no commission--especially on a wholesaler property that will not go through a realtor.  How many times can you do that ethically and morally--and keep that network open?

@Charles Gibbs I was talking more for wholesaler properties rather than for MLS properties. Harder to do due diligence on wholesaler-suggested properties.

Ali Boone · Answer

Ha. I totally am.

Robert Piller · Answer

@Ali Boone I see you are a philospher in addition to a hipster.

Great motto!

Ali Boone · Answer

I live by the adage of "don't take advice from someone you wouldn't trade shoes with." Reversing that, I only take advice from people I would trade shoes with. That's how I know who to listen to :) You'd be surprised how much easier it makes the process of finding people you can trust!

Robert Piller · Answer

@Ali Boone Piggyback on successful people's shoulders--solid advice.

Ali Boone · Answer

Hi Robert! Great questions. My personal opinion of how to get the most accurate information, property managers local in the area. They would be 3rd parties to any sellers or wholesalers or whoever, so they can give you unbiased information. They are on the front lines in the rental arena there so they would know how vacancies are doing, tenant quality, turnovers, overall quality, etc.

Other than property managers, there are a lot of people who specialize in market data and where the advantageous places to buy investment properties are and they can explain why. Instead of doing the research myself, I tend to follow in the footsteps of those who know what they are doing way more than I know myself. I do due diligence on what research they give, but for the most part I piggyback. There are very known markets out there, like where swarms of investors are buying. I definitely look at those.

Detroit, spotty for sure. I won't buy there personally but that's not to say properties there won't work.

Robert Piller · Answer

@Lisa Phillips Great advice. My gut is telling me the same things.Thanks.

Lisa Phillips · Answer

@Robert Piller

I invest outside of where i live, and I suggest it for everyone with a few caveats

1) @Jon Holdman was right about getting on a plane, or visiting in person. Google streetview is good but doesn't stimulate your gut on telling you if its good or bad. However, you can mitigate this by coming up with a solid list of candidates to look at when you come. If you only have a Saturday and Sunday, you should look at at least 14+ homes. If you need to get a few realtors and section them in blocks of 4 hours to not wear them out.

2) Since you're open to travel, check out state and local politics. Its on my blog, but the gist is that if you have a choice of municipality, take into account Red State/Blue State politics. The bluer the state, the more risks you have on your real estate because the number of fines/payments to be made, and entities to be paid under threat of lein action escalates by the state. Would I choose Detroit? Not with them going bankrupt and not knowing how to reduce spending.  A city that doesn't know how to contain spending, ONLY knows how to tax, and property owners are hit with fees to be paid to code enforcement, environment registration, lead registrations, and property taxes. Check out municipalities OUTSIDE of Detroit for a more stable economy that isnt relying less on jobs and more on taxing the few people that are still left to pay for services that should have been cut 20 years ago.

3) Thirdly, the US has so many different city states, different microcosms, that its easy to use the internet to flesh out a great list of potential, affordable real estate investments that give high rents. I have all of these sites up when searching for 1-Local Realty MLS (local vs national also has cheaper deals) 2-Crime Reports (at my price point, i want ot make sure you're only choosing "safe" neighborhoods and most municipalities have some sort of online presence with 30-60 days of crime reports) 3-Rentometer (this is a pretty accurate rent aggregator to tell you the low/medium/high rents for that address 4- Craigslist to see what type of rental activity is listed there.

4) While you're there, meet up with some turnkey managers and property managers. If you like their selection and feel that they are honest with you, they are a great lead for investors like me who decide to sell their properties for whatever reason, and can hand them over tenant in all. My current property managers all send me listings that current landlords are selling.

All in all, choose OUTSIDE of Detroit rather inside (politics do matter), and also don't be hesitant to look at homes within an hour's drive that offer low cost housing and high rents. I live in DC, and I have properties within 1-1.5hr from me that I purchased for under 30k and rent for $900+

Good luck!

Bill Gulley · Answer

That, and we get bored making money the same way day in and day out.....la, la, la, la, same old thing.....  :)

When buying properties in another state, how do you analyze and view them?

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