Should I Buy an Investment Property in Another State?

Question

I should mention that the state that I would be buying in, is a state that I will be moving to within 1.5 years.

I am an amateur investor and currently using as many resources that I have available to learn as much as I can, as fast as I can. I have a lot of family members who are experienced with investment properties but I want to venture out on my own (at least in the beginning) so I can truly understand the in's and out's. I don't want to rely on anyone's advice and I want to make sound decisions for myself and my future.

I currently live in North Carolina but I want to buy my first property out in Texas (near the Dallas area). I plan on living on this property for the first year because my current income wouldn't support buying my first investment property and my first home. Plus, I recently learned about "House Hacking" and this sounds very enticing for a first-time buyer. I am very interested in duplexes, triplexes, or even a complex with more than three doors.

My question to you is do you think it would be a good idea to buy my first investment property/first home BEFORE I move to the state?

Thanks!

Chris Davidson · Answer

@Gabriella Cerda That makes a lot more sense now. I would go for it. Check to David Greene's long-distance real estate investing book. Start talking to property managers, and agents to get a feel for the market and what to expect for area-specific items.

Since it is your first I wouldn't go for self-management since you will be out of state. But also don't go with the very first property management company.

Dallas should have its own forum here too.

One thing to start working on before diving too deep is to talk to a few mortgage brokers and loan officers to see what kind of programs you can use. Being over a yar out may make owner-occupied loans not an option. They are friendly don't worry about reaching out to them. I feel like a lot of newer investors are afraid of this part, but it is the largest deciding factor on what you will be able to do.

Hope that helps you out! Good luck with your investing!

Nino G. · Answer

@Gabriella Cerda I think what you want is very doable. My advice would be, not to mix OOS investor with Never Present investor. I myself invest OOS, but only because I have capacity to still make regular visits and check that things I paid for are actually done. If I need, I can travel every month and check for things. I also don’t so any contract without local lawyer reviewing it for me.

Since you have different kind of job from mine, I would leverage school breaks if I were you. Why don’t you spend this summer in TX, personally meeting and vetting people you hire. Meet other investors, and hopefully by the end of the summer you already have a property set up with the PM. Then you could ask your PM to schedule an inspection during winter school break and be present yourself on that inspection, to make sure the tenant is not destroying your property and it is in a condition, that the PM is claiming to be. This way, you should be able to avoid most of the OOS investor horror stories.

If you want to be never present investor, however, I would advise against it. Don’t expect that you will send people money, give orders from your phone from the comfort of your NC living room, and people in TX will be just looking out for your best interest. Hire, trust but verify is very important with OOS investing.

*this is not meant to be a legal advice, I am not a lawyer.

Gabriella Cerda · Answer

@Chris Davidson

Thank you so much for reaching out and all the advice you have given! I just needed a starting place (other than reading books and listening to BP Podcast).

I gotta get started on my homework now! Hopefully this is my first step to success.

Hope you have a great week!

Reese Hamilton · Answer

I agree with everything @Chris Davidson says.

The biggest challenge with investing out of state is building a solid team on the ground in your target market. Mortgage broker, lender, real estate agent, Property Manager, if you are going to flip a house you will need a handyman or general contractor. Once you have a team built you can leverage their knowledge in the area to make decisions. Good Luck!

Gabriella Cerda · Answer

@Chris Davidson

I am a teacher in the public school system and teaching is much better in TX than where I am now. My fiance is graduating next May and that's when we are planning to make the move. He’s a veteran and TX is very veteran-friendly. I also have some family near Dallas. Texas just seems like the right place to be.

You're right on having to rely on others' advice with investment properties. I just wanted to express that I want to learn as much as I can on my own, while also taking advice from others before I make my first purchase. My ego isn't so big where I think I can handle everything on my own without any help.

I also believe that purchasing a property somewhere where I already have roots established but I don't want to make the move to TX and have to wait a lump some of years just to ”make connections”. Does that make sense?

I want to get this project up and running as soon as I can but I want to make the smartest moves possible.

Chris Davidson · Answer

@Gabriella Cerda What makes you sure you will be moving there in a year and half?

For being new I think you are going to have to rely on other advice to make sound decisions. You just need to filter out whose advice is useful to your situation. If you are going to use a property management company, I think it wouldn't make as big of a difference in where you invest.

However you will need to build a network where ever you end up investing, and it usually easier to do that where you already have roots. If you have connections in Dallas it may make more sense for you to start there.

Should I Buy an Investment Property in Another State?

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