8. You Don't Need to See that Out-of-State Property Before You Buy It
Do you really need to see that property before you buy it? If you live in a high cost of living area you might be doing most of your investing out of state. If that's the case, save your airfare, hotel, and rental car money and use it towards closing costs or renovations instead. We'll explain why.
Do you really need to see the property you’re about to buy? Or you’re thinking about buying? What will that actually do besides give you the warm and fuzzies? You can get all the information you need from the internet or professionals in the area that are just a phone call away. And that’s the key. The experienced real estate agent, appraiser, property manager, and contractor know way more about the property without even looking at it than you ever will by seeing it from the street or stepping foot inside. Unless you’re experienced in a trade directly related to construction or real estate, seeing your property before you buy isn’t necessary.
This is a concept that may take some time to sink in. I know it did with me when I first decided that I was going to buy rental property and knew I wasn’t going to be buying it in San Diego. But I listened to people who had bought real estate without seeing it with their own eyes and it made sense. Am I trained to spot foundation problems? Nope. Do I know how to spot faulty wiring or an electrical panel out of code? nope. Do I know what tenants in the area want? Nope. Do I know what neighborhoods are hot and which ones are trouble? Nope. Hopefully, you get the idea here.
Now I’ve seen the properties I own in detail of course. I’ve seen hundreds of pictures of them taken by various professionals. However, I’ve never seen a single one before I purchased it. I have gone inside one about a year after I purchased and renovated it. And honestly, it was cool to see someone living in a home I busted my butt to buy and fully renovate. But meeting the team of people that helped me buy, manage, and maintain that property was far more valuable.
-Ultimately, your property is an investment. Not something you’re going to live in. It’s important to emotionally distance yourself from any investment you’ll ever have. Real Estate is no different. You’ll make better, more objective decisions if your emotions aren’t tied to your investment. I guarantee that bad stuff is going to happen to your property or in your property if you’re in the game long enough! Also, you don’t go walk in the front door of the corporate offices of the company whose stock you’re thinking about buying, do you? So why is long distance real estate investing any different?
-The realtor or broker you’re going to work with knows the market dynamic. Your property manager will know what the units will actually rent for and which areas are good and bad. Your property inspector can spot dozens more problems than you ever will with your untrained eyes.
-It’s obviously critically important to pick a great team of local professionals. So don’t just call up the listing broker and start dealing.
-Try to find an agent that is either an investor himself, or one that is used to or at least likes working with investors. You don’t want to work with an agent who is only used to selling the American dream to buyers who owner-occupy.
-Actually, the more people on your “team” you can assemble that are also real estate investors the better. They understand what you need since they need it themselves!
-So How do you find great people for your team? Talk to multiple people. Get recommendations from other investors. Biggerpockets is a great place to start. Unless your target market is very small, there’s probably someone who’s asked for recommendations for brokers, PMs, lenders, you name it. Then call a few of them. Ask who they recommend for other trades. You can start by asking your agent who they recommend for property management, insurance, and trades. Then go from there. If the same names keep popping up then you’re onto someone good.
-Property Managers are the most important part of the equation. And no, you shouldn’t try to manage a property yourself from far away. A good Property manager can make a marginal property a success. A poor one can make a great property fail. Don’t go with the cheapest one you can find either. You’ll end up with crummy tenants and a PM who’ll never return your call. I recommend spending most of your time searching for and vetting property managers. You can start by searching bigger pockets. People there will tell you who to run away from and who is excellent. Be sure to call at least three. Did I say this is the most important part of the success of your rental property?