What to look for when visiting long distance investment city?

Question

I'm a Canadian looking to purchase in Columbus OH. At the moment putting together all the pieces; agents, PM, lenders, CPA, etc. Hoping to have everything in place end of OCT. I am considering booking a flight to Columbus OH mid november. Have already been talking to local investors, my agent seems very knowledgeable about the local area, and I'm cross-referencing everything with my own research online. This is giving me a rough idea about the neighborhood classes.

My question is if I am to book a flight, how can I get the most out of my trip to benefit my investing goals?

-drive the bad areas when its dark to get a feel for how bad those areas actually are.

-Maybe try to book some viewings of potential properties fitting my criteria to see the build of the homes as this can vary area to area.

-Is there anything else I should look out for?

Secondly, with all the online resources available, and having multiple boots on the ground ( cross-reference areas with my PM, agent, online) is it even worth it for me to fly down? How much can I actually learn about an area in 3-4 days compared to people who live in the area for months/years posting their experiences online.

If I do fly down would it be a better idea to get something under contract first, or go prior and study the areas?

Simon Ashbaugh · Answer

This to me is a toss-up. You could come down and drive the neighborhoods but you probably won't find anything that a reasonably decent agent wouldn't sort through for you. Columbus doesn't have any neighborhoods below a c grade, so you won't find anything shocking by driving it day or night. Ultimately it's up to you, and if you feel that you just can't make a decision you're happy with without seeing the city by all means, come. But if that's not you, then, personally id wait till you buy.

Carlos Ptriawan · Answer

This is one terrific advice.So when you visit the neighborhood, check the curb appeals, check whether their HVAC is caged or not, and the grass is cut or not.Also there's specific software that can give a map which block of neighborhood has the strongest appreciation,etc,etc.

Jay Hinrichs · Answer

my suggestion for Mid west rentals is this.

Google the median home price if thats what your looking for a SFR.

only visit neighborhoods that are within 5 to 10% of the Median home price NOTHING Lower.  This will keep you in the safety zone.

Steven Goldman · Answer

@Gurjot Grewal

Although I am not from Columbus I have spent a great deal of time in Columbus I think it is a good place to acquire properties. I would start by having your realtor send you listings of properties which you can review and select some properties that you find interesting. I would only go to Columbus if your  research indicated that you have targeted specific properties or areas in advance. Some of the best bargains are in the suburbs of Columbus where the gentrification has not caused too great an appreciation in prices.

Make sure you are familiar with school districts if your are buying single families that would have renters or buyer's with children.  You should also schedule meetings with contractors so that you can assess the contractors who might have been recommended to you. Finally, schedule a meeting with the property management team. I have found than when working outside my own turf in Philly it pays to develop personal relationships with your team members. It pays off in the long run. If you can find a meetup during the time your visit is scheduled, I would attend a REI or other investor meeting and pick the brains of the attendees. Investors are always eager to share what they know with you. Good luck.

Leo R. · Answer

@Gurjot Grewal whether it's worth flying down I think depends partly on your situation (including your net worth, how many other properties you have, what your other obligations are, how much this Columbus property could hurt your net worth if things turned south, etc.).

For instance, it's not worth it for Warren Buffet to fly out to a city to look at a $350k single family home before purchase because even if that property is a total disaster, it's just a tiny portion of his net worth...plus, he has much more valuable things to do with his time... On the other hand, most beginning investors can't afford to lose their shirt on their first property, and there may not be any things for them to spend their time on that are more valuable than the due diligence process, so it makes more sense for them to do extensive due diligence.

For most investors, it often makes sense to put in some real time and effort to due diligence (ESPECIALLY when trying to break into a new market they're unfamiliar with). Personally, I would take the time to go there and check things out in-person; there's so much that can be learned about neighborhoods, properties, property managers, realtors, etc. in-person that you can't learn from photos, videos, google street view, etc.

If you do go to Columbus, it's probably worthwhile to meet with your team members in-person and have some questions ready to ask them.

Personally, I'd be asking the following types of questions of the PM and the Realtor: Do you own any rental properties, and if so, what type and where? Have you ever managed a significant rehab on a property? Who are the tenants who occupy your properties? What are the biggest challenges you've encountered managing your properties, and how did you respond to those challenges? etc., etc., etc.

I think there are several BP articles/blog posts and probably forum content on the topic of how to interview PMs, Realtors and other team members--it's probably worth checking those out...

Good luck out there!

Jay Hinrichs · Answer

caging HVAC in many cases is a good indicator but not always..  I was at a closing in ATL a few years back  ( attorneys office in a A class office park) and commented on how come its so hot in here.

He said their condensers were stolen the night before :)  its really quite the sport in many areas of the mid west deep south.  you can put lojacks on them.

Drew Sygit · Answer

@Gurjot Grewal

Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

Good luck with whatever you decide😊

Patrick Drury · Answer

@Gurjot GrewalI would say do your research and if the Columbus market fits what you are looking for then move forward with buying a rental and only come out if you are in contract and you want to see it.

Jayson Cain · Answer

Hi @Gurjot Grewal, I'm based in Southern California, but I have started my out-of-state real estate journey in Indianapolis. Now, I have a portfolio of Short Term Rentals and Long Term Rentals. I've started looking at Columbus because my business partners have found success doing Mid Term Rentals there and the returns are solid. I’ve also helped other investors with their DSCR loans and flip projects in Columbus. Happy to share my experiences and chat with you more if you're interested.

What to look for when visiting long distance investment city?

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