Owning an out-of-state real estate investing business is awesome.
It allows you to live wherever you want, invest in the best markets around the nation, and it requires you to create systems and processes that take you out of the day-to-day management of your properties (which is good!).
But as Ryan Dossey said in his below video, “If you go into this industry with rose-colored glasses, pardon my french but you’re gonna get your ass kicked.”
While out-of-state investing is awesome, it also requires a bit more due diligence than your last local flip.
You can watch the video below or read through the article to learn about 5 mistakes that out-of-state investors need to be careful of!
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1. Not Having Boots On The Ground Before Buying
We don’t want you to be paranoid… but be careful who you trust, especially when you’re buying a home out-of-state. Remember that there are sketchy realtors and wholesalers out there (people who are just trying to make a quick buck) and they’ll happily screw you over if you let them.
Before you buy a property, we recommend getting boots on the ground. Find someone you trust to go look at the property (someone who has no relation to the agent or investor you’re buying from) and send you pictures of what they find. This should be a part of every single home you buy out-of-state.
2. Not Checking On Properties Often Enough
Once upon a time, Ryan Dossey was going to buy a property that ended up not existing. On the way to see the property, they discovered that the home had caught on fire and the city had bulldozed it. The owner had no idea.
The lesson?
Check on your properties at least every three months. Pay someone to do a drive-by for you or, if you want to be more thorough, then notify the tenants and have them check the inside and outside of the house.
3. Not Getting Full Inspections
This is where you really don’t want to have rose-colored glasses. It’s easy to get distracted by the money you could make from a deal, rush the process, and neglect getting a full inspection of the property.
Don’t.
A proper process includes having the property inspected by a professional — and it’s in your best interest to trust that process… not the sellers, wholesalers, or agents who PROMISE there’s nothing wrong with the property.
4. Paying Too Much
Your home here doesn’t not equal that home there.
What I mean is, when you’re buying a home in an area that you’re unfamiliar with, do not make assumptions. Something might seem like a good deal when you compare the prices to your own market, but be a terrible deal in the market where the home is located.
Don’t compare apples to oranges. And get a full appraisal if you have to. It’s better to pay for an appraisal and find out that the deal is a bad one than it is to pay double or triple the real value of the property (we’ve seen it happen before).
5. Not Working With Trustworthy Contractors
As an out-of-state investor, you don’t have to just do due diligence on the property, but on the people who you’re working with. Before you trust anyone to inspect, appraise, or make repairs on the home… check reviews, talk to past clients if possible, and speak with the people on the phone.
If you’re getting a weird vibe, find someone else. And if you’re struggling to find someone you can trust, then just hire a professional.