How Do You Learn An Out of State Market?

[John Phong]

Hello BPers, I understand investing has a lot to do with knowing your market, the more you know the better. I am looking to build an out of state rental properties portfolio. What do you do and/or suggest on learning an out of state market or a location you're unfamiliar with?

[Anthony Gayden]

@John Phong

When I decided to start investing in Phoenix, AZ, I didn't live out of state, but I did live 3+ hours away on the other side of the state and had never lived in Phoenix before in my life.

The first thing I did was identified multiple properties that I was interested in buying. At the time the MLS was full of deals, so I found about 10 properties that fit my criteria.

I researched each of the individual properties using Google Maps street view. I also used public records searches for Maricopa County and Zillow to give me more information.

Next I found a realtor in the area and a mortgage lender who pre-approved me for the amount I was looking to spend. I made sure that both had systems in place that were fully online. That way I could electronically sign and upload documents.

I made a trip out to Phoenix and spent an entire day driving around and looking at the different properties, which were spread out amongst 5 different cities/suburbs. I was able to eliminate 7 of the 10 based on them being in poor condition from the outside, or in rough areas.

I put an offer on a property in Glendale, AZ that was accepted and I had it under contract. I had the property inspected without being present. The inspection revealed a mess that was going to require $30,000+ to repair. I was able to back out and get my earnest money back.

A few weeks later I got another property in the city of Phoenix under contract, but this time everything went well and I closed. I called and interviewed 5 or 6 property managers by telephone. I eventally found an excellent property manager actually by searching BiggerPockets.

My property manager does everything electronically and deposits my money directly into my bank account, so the fact that I now live over 1000 miles away is not an issue.