Investing in real estate sight unseen is scary. Many horror stories begin with, “But the pictures online were so nice…” It’s tempting to jump into what seems like a great deal and make an offer before you see the property out of fear it will be snatched up before you’re able to view it in person. While investing from a distance isn’t necessarily a bad idea, there are some steps you need to take to ensure the property is worth purchasing.
How to Evaluate An Out-of-State Property
If there’s an opportunity for you to see the property in person before making the deal, do it. Seeing the property yourself beats any other method you’ll use to evaluate its value and condition. If you can’t possibly make the trip, here are some tips to assess the market and area of the property.
Use online tools to evaluate the neighborhood and city where the property is located. Consider what’s important to potential buyers: walkability, school district, proximity to shopping and restaurants, crime rates, and cost of living. Several free websites exist to help you track that information.
You can also use online tools to determine the property value. Zillow, EAppraisal, Trulia and Realtor.com are helpful if you can’t access the MLS.
Visit The Property
Looks can be deceiving. As we mentioned above, don’t rely on online photos that have been touched-up or enhanced in attempts to lure in a buyer. Even if the property you want to purchase is a good deal, you’ll want to know the road conditions of the neighborhood, if there are any abandoned homes, overgrown lawns, or litter lining the street. If you are able to visit the property, make a trip to the neighborhood at night. The activity you see when the sun goes down can be very telling of a neighborhood.
Partner With Professionals
Speak with professionals in the area, and by that, we don’t necessarily mean a realtor (although they will have excellent insight). Speak with the neighbors of the property, folks at a nearby business, or current tenants of the property (if the seller allows it).
Strike up a conversation with open-ended questions like:
- How’s the neighborhood?
- How do you like living here?
- What’s the biggest issue about living on this street?
After getting the real scoop from neighbors, rely on knowledge from fellow investors and real estate agents. What are their predictions for the neighborhood? What have recent sales shown?
Build a Team
Surround yourself with real estate savvy professionals who can go on your behalf to view properties for sale. When a property comes available, have the team research the area. If you’re interested after their initial findings, send your team to view and take photos of the property. It’s crucial that these team members are thorough and trustworthy so you get an accurate description of the property.
Check In Regularly
If you invest in the property to build rental income, don’t just hire a property manager and forget it. Stay engaged with the property management company and visit from time to time to ensure the property is kept in good condition.
The key to investing in out-of-state properties is to do your research before making the purchase. Come in with an open mind, do your due diligence and make the best decision you can with the information you’ve gathered.