When it comes to real estate investments, it’s popular to purchase properties that are out-of-state.
This can be due to many factors like affordability and a higher return on investment. Some people choose to invest out of state because the opportunities aren't as strong where they live, but they don’t wish to move.
Despite it's popularity, there are a lot of unknowns for out-of-state investors.
The main thing a new out-of-state investor might struggle with is whether or not they can trust their property management company. Is their management company trustworthy? Are they telling the truth when they report the state of the house?
These questions can cause anxiety and frustration for investors.
Without eyes on the property, it can be difficult to know whether it’s a good investment or not.
A good property management company will do their best to ensure that out-of-state investors they represent know exactly what the property is like. Essentially, the management company can act as the eyes and ears for the investor.
3 Non-Negotiables When Investing Out-of-State
If you’re new to investing out-of-state, here are three things that you should establish before you purchase your first property.
1. Don't Choose The Most Beautiful Properties
While you may want your property management company to only send listings which are in perfect condition, you may not be getting the most bang for your buck.
The good thing about the bad and ugly properties is they often scare away a lot of the competition. If the property is immaculate, there’s a much higher chance that it will be priced at retail. It may receive multiple offers that can drive the price even higher.
Choose a property management company that is willing to look past the ugliness of the property and focus on the potential return for investment.
Your property management company should be seeking the best investments, not just the most attractive listings.
They should be able to give you an idea how how they would like to restore the property. In addition, they should provide you with a cost estimate for repairs and restoration.
2. Know Your Appetite
This leads to my next point. Before you begin investing, know what your appetite is. The more you can handle, the more you can potentially make.
Some investors want turnkey properties they can immediately rent out. Some investors are comfortable with properties that just need some paint and new carpeting. Others are fine with replacing appliances or paying for minor repairs.
Then there are others, who can see past the most devastated properties and see their potential. These properties may have significant issues like missing floors, a foundation that’s in distress, or caved in roofs. Understandably, this type of property is not for everyone.
The risk and uncertainty are enough to turn away many investors. However, if you have a strong appetite and are willing to work with these houses, they can be a good investment.
Before you send out your property management company to find properties for you, have a good idea of how much you’re willing to put into repairs and what type of repairs you’re willing to make.
If you are only interested in a turnkey property, let your property management company know right away.
3. Be Absolutely Crystal Clear on Your Goals
Because your property management company is acting as your eyes and ears, it’s essential that you’re crystal clear with them about what your goals are.
Before you begin the process of looking at houses, you should understand what a deal looks like. You’ll want to know what percentage of return you want, what you’re willing to spend, and how much you’re willing to pay for repairs on the property.
If you’re out-of-state, there’s a good chance you’ll be living in a different time zone than your investment properties. If you and your management company aren't on the same page, you might lose out on a deal.
On the other hand, if you and your management company are on the same page, they can jump on a deal and put your name on it. Investors who are out-of-state have to be in sync even more than those who invest locally.
Why is Now a Good Time to Invest in DFW?
When the 2008 housing market recession hit, Texas was not impacted as much as other states like Florida, California, and Arizona. Texas did experience some affects from the recession, but it was far less severe than other locations.
Since the recession, Dallas Fort Worth area has rebounded completely and has experienced significant growth in the housing market.
If you’re considering looking for property investment opportunities in the Dallas Fort Worth area, LEAP Property Management will work hard to manage your property.
Contact Leap Property Management today to learn how we can help turn your property into a lucrative investment.