How to invest in real estate outside your area with ease
Many people go out of their own market to buy quality real estate investments at a fraction of the price. Did you know that, for example, a $400,000-$500,000 home in California is similar to an $80,000 home in Dallas, Little Rock, or Memphis? Did you know that rent for a house of that price can be as high as $1000 per month or more?
Your peers are buying properties in these other markets, getting a lot of cash flow for their money and building up a diverse portfolio of assets quickly. Are they geniuses? Are they better real estate investors? The answer is no. Many of these people stepped out of their comfort zone, took very little risk, and are now reaping the rewards. How are you doing this? We’ll see.
1. Take advantage of the markets: First of all, real estate investors in markets that had a big price rise in many cases are suffering now that the appreciation is gone. Smart investors in these markets look outward and seek positive cash flow. Many markets in the interior of the US, especially in the South, are not only growth markets, but have had depressed prices for quite some time. This is a better angle to look at than, say, a rust belt town in the Midwest with a declining population and closing factories. Look where the economic growth is and prices have been low. Example: Memphis, Dallas, Little Rock, Atlanta, Birmingham, Montgomery and others.
2. Do your homework: Search online and find local real estate investment associations. Try http://www.nationalreia.com and look for associations in your target market. See if you can access the forum section of their websites. Who are those who move and shake? Who is buying and selling a lot of properties? Then look on other sites like Craigslist in the same market. Do you see any correlation? You should see some repeat names, similar offers, etc. Use this information to start evaluating homes. Then use Google, Yahoo, MSN, others. For example: If you google the following, which businesses come up: sample city, real estate investment, or sample city discount properties. Look for reputable companies that sell properties. If they don’t have an established website, stay away. Usually people who are one-man shows don’t have good support staff.
3. Interview to form a real estate investment team: After searching online and finding out who is buying and selling many properties, make a list and interview them. Find out who your support staff is. Does this buyer and seller work specifically with rehab teams? What about management companies? Closing Attorneys or Escrow Agents? You must interview 3 of each of these or more. Be brutally honest. If you can harness the wisdom of a team, the process of owning property outside of your area can be easy. Make sure management companies are willing to work with real estate investment contractors, sellers of your property, etc. Ask about each other’s reputation.
4. Book a flight – Take a trip to your new market to meet your team, hit the streets, look at available properties, and see everyone’s offices. This will often be the real test. It’s easy to create a false front online or over the phone, but it’s very difficult to cover it up after showing up at your door. Spend 2-3 days in your market. Look at all the neighborhoods where wholesalers or agents work. Make sure they don’t sell you war zones. Ask them about rental ranges, rehab estimates, rental time, etc. Check these numbers with management companies and contractors. If all goes well, proceed. The right team of people will come out.
5. Shop and start slowly. Many people will try to pressure you into buying multiple properties at once. For a property or 2 within your risk threshold and see how it works. If it works well: wash, rinse and repeat. You have discovered a new real estate investment market! I hope you had a bit of fun and explored a new area as well.
By using it, you too can benefit from real estate trends taking place in undervalued markets across the US.