Investing out of area/state

[Glenn Mayo]

So, I have the disadvantage of living in one of, if not the, hottest real estate markets in the country, here in DFW Texas. There are a lot of pros and cons to it, but I keep running across people who don't even live in Texas, let alone in this market, who are investing here. And that got me wondering: if I was going to invest outside my area, A) what would be the best way to determine which markets were the best to invest in, and B) without being able to simply hop a flight at will and go check out properties, how would I know if what I'm buying is a good buy? As an example, I've saved a couple outside investors some HUGE headaches when I found out they were looking at properties in the Stop 6 area of Fort Worth. Because I live in this city, I know that buying in that area is like buying in South Central LA; you could do it, because property values there are SO low, but you'll regret it, especially if you're a buy and hold investor. So, let's say that, somehow, I determine that, I don't know, Oklahoma City, for example, is an up and coming market, and I decide I want in on that. But I can't actually go to OKC to look for properties or close, etc. HOW would I do it, and do it well? I know some of you on here are investing out of state, sight unseen, and doing very well. How do you do it? How do you figure out which markets to enter, where in that market to invest, and then find truly good buys in those areas and go through the process all the way through closing and property management, all without ever setting foot in the area or laying eyes on the property? Learning to do this is vital for me, since I am really being forced out of my own market by the fact that it's so hot that everyone and their brother, from all over the world, is buying here. Comprehensive help would be wonderful. Thanks!

[Guy Azta]

Glenn - good question. I'm in Los Angeles, so facing similar issues. I bought 9 properties in different markets. Some of them from turn-key operators, some I've done my own research and bought. Overall they have all done pretty well. So based on my experience, it is doable. Also, I've never seen any of them. Well, I did see couple in Las Vegas after the fact, and to be honest with you, it really didn't make any difference. Since I get to Vegas several times a year, I have ample opportunities to go see them, and I never do. But that's me. 

So how can you do it?

First, you can go to some events where they bring teams from different markets and they present their markets. Even if you don't plan on buying turn-key, you can at least get educated.

Second, there are always publications on where people are moving to, where houses are affordable, where incomes rise faster than houses.

Third, keep in mind that there are many people who do well in many different markets. There are also people who do well in rougher markets.

Fourth, once you pick a market and sub market, you can start looking at nearby property values, crime map, schools rating and get more educated. Then you can start reaching out to investors in that area, brokers, property managers etc

I use Loopnet as an initial guide to see where I can find deals that make sense to me, and then I start looking at the market. 

I may be a bit scattered for some investors. I personally like being very diversified. I'm sure some wold say my strategy is bad. So you can pick just one market that seems appealing to you and take it from there.