Out of State Investing Checklist

[James Wachob]

• There are a lot of moving parts when purchasing a rental property. A good real estate professional who is familiar with the area will be able to help you navigate through this list. 
•   Why did I create this list? A few years back I built a new home as a rental and afterward found out a small portion of the lot was in the flood zone. If I would have used this checklist it would have saved me a lot of time and some money. 
• 1. Is this property in an A, B, or C neighborhood?
  
• - Since everyone has their own definition this will vary. 
• 2. What is my cashflow?
• - How much $$ is left over after ALL expenses? (don't forget to account for vacancy, future repairs, and PM fees)
• 3. What expenses were accounted for in the proforma?
• - Vacancy __ % 
• - Future Repairs ___% Built before 1985 8%, After 1985 5%, 2000 and newer 3%
• - Taxes (Where was this info sourced and how does the municipality calculate future increase)
• - PITI Principal, Interest, Taxes, Insurance (if you are using leverage)
• - Property Management Fees – included but tax-deductible this why some sellers may quote cash on cash before mgmt. fees.
• 4. Is the property vacant or occupied?
• Vacant – How many leads does the property manager have on this home, and what measures are being taken to find a quality tenant? Is the target rent achievable?
• Occupied – When does the lease begin and end? What can you tell me about the tenant? How much of a security deposit is being held, and how do you determine if it or a portion of it is returned?
• 5. Detailed Scope of Work that shows all work being performed on the property.
• Your big-ticket items are 1. Roof, 2. Mechanicals 3. Trees 4. Flooring – hard surface flooring in high traffic areas and wet areas.
• 6. What appliances are included? & is there a Washer/Dryer Hookup?
• 7. What amount and type of crime is in this area?
• 8. Weather conditions?
• - Average snowfall, high wind or tornadic activity, costal concerns?
• 9. Copy of a sample Purchase and Sales Agreement - If I'm considering any RE purchase I want to review the paperwork thoroughly during the due-diligence period and possibly have my attorney review.  What contingencies are in the agreement?
• 10. Copy of a sample property management contract - what fees are charged and what commitments do I have to the PM company?
• 11. Copy of a sample lease - I want to see the lease my tenants will sign with the PM company managing my properties. 
• 12. A complete step by step game plan to purchase - Any realtor or company selling homes to out of state investors should have a well-defined process of working with their clients. 
• 13. Company Bio – Who am I dealing with? How long have they been in business?
• 14. Photos, Photos, Photos - and videos. They say a picture is worth 1000 words. Ask for close up photos as well as the "glamor shots" I want photos that give me a look at the home "through the eyes of an investor" 
• - PRO TIP: take a photo of the sticker on the AC unit, google the serial number and you will know the year the unit was manufactured. 
• 15. Comparable sales - I want to know how an appraiser would determine the value of this property. 
• -Comparable sales should be recent, within the same vicinity, same bed/bath count range, similar sqft range, and of the same or similar condition. 
  16. Comparable rents- what are similar homes in the area renting for?
• 17. What inspections will be required for this purchase?
• - 3rd party home inspection $300
  
• - Mold inspection $250
• - Termite inspection $125
• - Sewer scope report $250
• 18. What are my hazard insurance options?
• 19. What size is the lot?  ___ x ___ = ____
• *An acre of land is 43,560 - my rule of thumb is that I do not own rental properties with more than .5 acres
• 20. Foundation: Basement? Monolithic Slab? Crawl Space? Split level?
• 21. Is this property located in a FEMA flood zone?
• 22. Exterior construction:
• Brick, Vinyl Siding, Aluminum Siding
• Roof: Age ___ material?
• Windows?
• 23. How close is this property to major employers?
• 24. What shopping is available in the area?
• 25. What parks and outdoor features do the residents have?
• 26. Are there sidewalks and streetlights?
• 27. What type of resident will be attracted to this home?
• 28. Who provides utilities, fire, police, etc.?
• 29. Public Sewer or Septic? Public Water or Well?
• 30. Is the property Attached or Detached? 
• 31. What type of Storage is available for my residents? Closets, shed, utility room?
• 32. Parking: Driveway, 1-car carport, 2-car carport, 1-car garage, 2-car garage, Street parking only
• 33. Is there an HOA? If so, how much are the annual dues, and what does that cover?
• 34. What is behind the property? Another house, Commercial building, Cemetery? 
• 35. Preferred lenders? List of available lenders
• 36. Square footage? Source? _______ / Appraiser, Tax Assessor, Realtor, Current owner. 
• 37. Type of property: Ranch Style SFR, 2-story SFR, Duplex
• If you have checklist items please share in the comments below!
• @Stephanie Jones thank you and others for helping me with this list.