How to invest out of state

Question

Ali Boone · Answer

Well there are two main ways to do out-of-state investing. As some have mentioned, there's the turnkey route, but then there's the DIY route. I've always done turnkeys for myself, but I know plenty of people who do the DIY route. There are pros and cons to both.

Here's an old article but a basic one that lays out the two options:

https://www.biggerpockets.com/renewsblog/2012/12/2...

Out of curiosity though....if you're in IL, why do you want to buy out of state? My thought would be there'd be cash flow. Maybe just not where you are?

Janelle Groenhout · Answer

Congratulations on your decision to invest out of state @Rob Shah

This is what my husband and I did this past year when we purchased out of state without using a Turnkey provider;

1) Identify a market or maybe two to start looking in

2) If financing then get said financing established so you know your budget

3) Contact a Realtor- My husband literally googled Realtors in the area we were looking to purchase in and called the top recommended one online, he was amazing. We told ourselves if the Realtor at any time gave us grief or less then expected customer services we would drop him and move to the next on the list

4) Have Realtor create you an online search with your criteria and start looking at properties online

5) Ask for recommendations for Property Managers from your Realtor and start having phone or Facetime meetings to find who will suit you best. Along with research them online and review all documentation they give you and their website offers

6) Once you have a nice handful of potential listings that match your criteria either make a trip out to the area to view them in person or do what husband and I did and have Realtor do a video walk through of the properties and send to you to review

7) Make an offer on the best property

8) Close on said property- Can sign all closing documents from where you live

9) Realtor drops keys off with Property Manager and they take it from there

Account Closed · Answer

Hey Rob! A lot of investors I work with like investing right over the border in Indiana. Since it's about 45 minutes away I don't know if it would give you the full "out of state investor" experience lol.  Step one is establish your purchase criteria. What kind of asset class, cash outlay, and ROI are you looking for. Make a list of markets that you think may fit this criteria then rank them. Once you've got the top market, go find a GREAT property manager in that market- this will be key. Then you'll be ready to dip your toe in the water. Good luck! Investing out of state is a lot of fun- it forces you to think like a real business owner.

Rob Shah · Answer

Thanks everyone for your great insight.  I have a lot to digest here and cant wait to begin my journey!

Bryan Mitchell · Answer

I am also reading the book. I am on page 121 and I skipping big parts of the book. It is written for someone who has not started yet. If you already buying properties out of the area; city, state, or country, it is good. However, I know smart phones and property managers are good.

James Wise · Answer

Investing out of state can be very complicated if you let it get complicated. No need to do that. Don't try to reinvent the wheel here. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

Laticia Braxton · Answer

Really awesome advice given here.  I would also strongly suggest you make sure you properly vet all people involved (real estate agent, property manager, contractors, etc.).  Unfortunately, there are a lot of investors being taken advantage of in this type of scenario and although you can't guarantee that you won't have problems, not doing your homework may cause you a lot of unnecessary pain in the end.

Jennifer Delmore · Answer

I'm also wondering why you're focused on out of state when I'm sure there are lots of great opportunities within an hour or two of where  you're at.

How to invest out of state

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