There are many reasons why some investors shy away from out-of-state investments and why others welcome the idea. Aside from the obvious benefits of owning a piece of real estate near to home, there are numerous others. Local real estate agents and brokers, some of whom you may know personally, can provide recommendations on recently listed houses.
Multifamily investors can find excellent investment possibilities outside of their home states in a wide variety of markets. Rent regulation is either non-existent or severely restricted in these “landlord-friendly” states. More factors include a lack of high-end rental properties or waterfront real estate, a boom in population and job growth, and many other factors.
I use the same criteria as other syndicators and investors when looking at properties in other states. Low unemployment and significant job and population growth make value-add transactions more attractive to me. Landlord-friendly states like Georgia and Florida have growing populations and strong employment rates.
Start Doing Your Homework
It is possible that you have different investment requirements and company plans than mine. Any strategy for a multifamily deal is bound to fail if you don’t perform adequate research. Be prepared to conduct your research on both the location and the property.
The first step in locating the ideal market is to do a comprehensive study of the current market. You’ll want to keep an eye out for increases in rental income and employment, as well as take a closer look at the market’s demographics. Inquire as to who resides there.
If you want to make sure that you’re investing in a robust market, you’ll need to conduct some research. There are a number of internet resources that can help you get the information you need. This includes, but is not limited to, changes in the demography of the population. To get started, check out Census.gov and City-Data, respectively. It’s up to you to decide which one is best for your needs.
As a result, a wide range of metrics may be gathered via a number of advanced technologies. For example, IRR.com and Veros are included. Just keep in mind that visiting one of these locations will set you back a pretty penny. Vertical rent has a list of policies for each state that might help you determine if a state is “landlord-friendly.”
Create a Team
It’s a collaborative effort to manage properties that are located outside of the United States. The only way for me to discover this was to syndicate out-of-state deals for clients. You need a team of experts who are knowledgeable about both multifamily properties and the market in which you’re looking to invest.
Brokers are wonderful resources for suggesting additional members of your team, so consider including one on your team. A CPA and a lawyer, both of whom have previous expertise with out-of-state investments, should also be on your team. In addition, you’ll need a local property manager who understands the market inside and out to help you with your move.
In order to make out-of-state investments, you will need to put in the time and effort to hire remote staff. After putting together a team, your work doesn’t end there. You will still have to fly to your property, which may be six or seven hours away. You must be the current owner in order to bid. At least once a quarter, visit each of your properties to see how the crew is doing and to make sure everything is running well.
In order to make the effort worthwhile, you need a strong enough market and a decent enough property to provide the necessary quantity of cash flow. The cost should be worth it if you have a certain figure in mind. There are a lot of investors who want to invest out of state, but don’t want to deal with the inconvenience of administering it from afar.
Buying real estate out of state is often a good idea. You’ll need to perform your homework to make sure the market is solid and growing at a steady rate. The best team in the world won’t be enough until you invest in a syndicate as a passive investor. You’ll need to visit the properties frequently even if you have the best staff in the world.