Best Practices when buying Out of State / Turnkey Rental Property

[James Wise]

I find myself answering the following question(s) or at least a version(s) of the following question(s) multiple times a week.

• Q. What should I look for when buying out of state?
• Q. How do I get started investing out of state?
• Q. Is investing in turnkey real estate a good idea?
• Q. Have you ever invested out of state?
• Q. Is turnkey investing better then investing locally?
• Q. How do I make sure I don't get scammed investing out of state?

So I thought it'd be a good idea for us to just dedicate this thread to it. Let's get all the answers & best practices out there in one thread so all of the out of state investors can easily compare all of the advice that is normally given here on the forums.

I'll start things off with my advice on the topic.

It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. 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.