Purchasing Out of State Rentals

[Rob Terpilowski]

I'm considering the possibility of acquiring properties out of state as rentals, either SFH, or small MF properties. I'm located in the Seattle area, but rentals in the midwest are priced significantly lower with much juicier yields. I realize that the upside appreciation may not be as high as the Seattle area, but it seems that for the same amount of capital you can get a much higher cashflow.

 I'm interested to hear from people that have invested out of state, how have you done it? Purchasing a complete turnkey solution, sight unseen,  or build a team remotely from your home state to find properties and tenants, and property management.

I'm interested in hear both the things that have gone right as well as the pain points.

Thanks,

-Rob

[Alex S.]

Hi Rob,

Most of our investment properties are out of state as the cash-flow is better( I am in California).  When I go into an area.  I build a team first. I usually have 2-3 property managers  in case one is not performing. Also have someone that can find you deals( network with wholesalers realtors, etc). 

Most of the time we try to get equity on the purchase. As it gives downside protection if something goes wrong and increases your return. 

I would be careful sight unseen. Unless you have some boots on the ground that you trust. Perhaps do some research on the areas, We tend to ask what can go wrong first, Whats the climate?, In a flood zone? Earthquakes? How can I mitigate risk? What do the numbers look like?  Are there many foundation issues in that particular area.? etc,

Overall its worked out pretty well with a few bumps along the way. We started investing in 2003.

Hope this helps, Reach out if you need more specifics.

To your success,

Alex