First time out of state investor looking for advice!

[Cindy Zhang]

I'm a home owner in California and looking to invest in Seattle area for rental properties. Cashflow is relatively straight forward and easier to calculate, so I find myself mostly struggling with the evaluation on property appreciation potential. 

I wonder whether some of the same play book items in CA still apply in WA and if not, why not and wo what extent.

For example:

1. Land appreciates and house generally depreciate. Therefore the larger land, the better.

2. School district comes first. It takes many years to build up a good school district and it stays relatively stable.

3. Commute comes next. Good school district appreciates first and most, then the neighborhood with great commute but worse schools (with families sending kids to private schools as an option).

Also, I happen to notice that the ratio on foreclosures seems to be a lot higher in Seattle than in North CA. Does it mean anything to investors?

Would love to hear your view on it!

[Olatunbosun Idowu]

Hi Cindy Zhang, 

Investing in out of state property for rentals requires much from you as an investor  and I must be honest with you it is somewhat demanding. I am glad you understand and can deal with issues relating to cashflow, I will try to expose you some other important factors to consider when buying out of state property for rentals. 

It is wise to know the risk of investing in property asset  in another state most especially information on the way rent is regulated and controlled in the state. Also find out if the state is a pro tenant, pro property owner or neutral, this should form the basis for your investment decisions particularly on rental properties 

You need to do your due diligence properly because a pro tenant state has a  tenancy law with rent strongly regulated in favour of the tenants and rents are strictly controlled by laws set far below reasonable returns on investment while a pro property owner state has laws strongly regulated in favour of the property owner but a neutral state has a balanced law system for both property owners and tenants. 

On appreciation of property, I am not from your region and I don't think i can be of much help in this area but I know property appreciate every two years and this is regulated and controlled by the housing laws of the state you are in. I am  also sure  there are books you can get this vital information from out there if you ask from people or investors in the state you would like to invest in. 

I believe it is best and reasonable to  invest in states that encourage collection of security deposit, whose legal system and the alternative dispute resolution outfit work effectively and efficiently and which is clear about the right and obligations of both property owners and tenants and also  whose laws  on issues relating to evictions, contract termination, lease and lease renewal, subletting and assigning of apartment favour you as the property owner. 

All other issues you may want to consider is the location, a friendly neighborhood and availability of other social amenities to make the place comfortable and habitable to your tenants and their families. 

I wish you a successful rental property investing adventures 

Thanks 

Olatunbosun Idowu