Hi @Molly Paprota - I can't say ENOUGH good things about this strategy - but you're right. It requires intentionality, elbow grease and the ability to pull out if things seem fishy.
I started looking out of state when I was first investing being that I live in Los Angeles and at the time, didn't have the capital to invest anywhere close by. I interviewed dozens of agents from other states and even put an offer on a home in TN that I ended up pulling out of after being quoted double the amount for repairs that the agent had originally assumed it would cost. I ended up investing in Fayetteville, NC where I've continued investing to this day. My properties out there do 400-600 a month in cash flow and are all single-family homes. Once I continued saving, I started looking closer to home where I invested in STRs and have built out my portfolio further. To be clear, I never once traveled to NC or Fayetteville and never have seen my properties in person. I have a terrific property manager who I stay in contact with and built out a great team to automate my entire process. I just look forward to my direct deposits each month. Sounds to good to be true, right? It didn't get there overnight though. Here are the takeaways I learned from that experience.
When investing out of state, sight unseen:
1. Make it personal. Get to know the agent you are working with. Ask them about their investment experience. Ask them to show you the homes they invested in and why they chose them.
2. Make sure to interview at least a couple of agents in the area. Ask investment questions that separate the BS "investor-friendly agents" from the good ones. (ie. do you know if this property meets the 1% rule? What's the ROI this property can most likely provide me annually? What is the vacancy % for this area? What does rent control look like out here? How long does it take to evict a tenant if necessary? What is the going rent for this type of property? etc.) These questions should be somewhat easy for most agents in an area they represent investors in. If your agent is struggling to answer most of these questions, move on.
3. Build a great team. Once you find a great agent, typically, they will have excellent referrals for property management companies, lenders, contractors, handymen, inspectors, etc. Do your due diligence and talk to everyone involved. Don't take shortcuts. If something doesn't feel right, find someone else to be a part of the team.
4. Always, always, ALWAYS do a home inspection. I have been burned by taking a property "as is" where the agent told me everything was in "great condition". An agent is not a home inspector. You want to know everything that is potentially wrong with the property before you decide to own it. In the same breath, don't let inspection reports scare you away. Don't approach them with emotions. Approach them like a business. There will be a lot of things the inspector finds - your job is to determine how many of these items need to be fixed to provide a safe place for your tenant while protecting your asset. You also need to determine what the cost will look like to make these repairs. Often, inspections can be leveraged to get even better deals - especially if the seller is motivated and doesn't want to make them for you. I've seen 30-40K come off of list prices, 50K in credits paid towards the buyer, etc. for home inspection reports that only require 15K in repairs.
5. Establish a routine with your property managers to check on your properties monthly. I once had a tenant do 4K in water damage before calling my property manager. The issue would have been resolved months earlier with almost no cost had my property manager walked the unit. (There was a leak under the toilet causing a puddle that the tenant decided not to wipe up for months, causing a hole in the ground that even affected the foundation.) Haha - good times.
Anyway, I hope this is helpful! Happy to chat or provide any other info if you want. Best of luck!
