@Account Closed
This is what I do when I invest out of state. I am not an agent or a realtor or a banker, I am just an investor.
1. First find the location/city where you want to invest. List out your investment goals in terms of timeline and expectations.
Location/City : how well do you know the city and the areas within? How well do you understand the trends that drive the city real estate? Are you comfortable with a possible downturn?
Investment goals : Do you want to fix, flip and sell? or do you want to buy and hold?
If fix and flip : you need good agent, good contacts(including contractor) and also a property manager. I dont suggest this strategy as a first investment.
If buy and hold : are you looking good cash flow or good growth? Just because some areas have grown in last 2-4 years they may not continue same way. What is your timeline for returns, do you want sell and reinvest? do you want to sell and exit? etc..
2. Pros/Cons of out of state investing :
- you learn how to delegate and deal with others doing the job, instead of you doing all the legwork. Important if you plan to scale your investments in future.
- diversification
- better chances of optimizing your results in terms of risk, cash flow and growth
- Taxes. I am not an expert but if you are a CA resident you may be pay higher property taxes for your investment state and higher income taxes in CA
- while property management works well with scaling, its a big overhead if this is your first investment
3. How to find deals, experts.
- Look for public rental and for sale listings, find agents who are on buyer and seller side and analyze their profile. Shortlist the ones who are dealing with multiple properties every month in the area. Reach out and make them sell you their services.
- Depending on the state, you can access historical sale prices, property taxes and rental history either free or at minimal cost. Do prepare this data for atleast 50-100 properties before making a decision
4. Travel to get the feel
Once done with 1 and 3, fly out in the area and spend few days to drive around neighborhood and take notes per home/block/street on what I feel. Check out open houses, foot traffic, etc. Click pictures of the street view and note down. This is where you understand difference between looking at homes on zillow/redfin vs your real experience.
Meet some of the realtors, agents, property managers, contractors you have shortlisted.
I find it worth every penny to do this analysis before making an investment.
You dont need to be real estate agent or contractor or handyman expert, you need to know the right questions to ask each of them and decide who can help you best.
