Buying property in the hottest markets in the world is harder to do, if you are out of state or even out of country. But there are ways of making it easier, so that you close transactions successfully.
Benefits of buying property out of state or out of country
Access the best deals in the world. The best deals are the ones with the most cash flow for the price that you paid (cap rate). The best deals are also the ones that you can scoop at such a low price that you feel the person selling the property to you is stupid for selling.
You might be a foreign buyer who is buying property in Tampa Bay, Florida to hold for the long term because traditionally U.S. real estate has been a very stable investment.
Sometimes you have to buy property sight unseen because you are buying so many properties while getting the best deals in all of the right locations.
Problems with buying out of state or out of country property
Finding the most profitable neighborhoods in cities that you are most interested in investing in can be a problem when you don’t know any experts that are on the ground who can educate you. Demographics change drastically among neighborhoods that are near each other in many American cities. Knowing the subtle differences of each neighborhood can be the difference between owning a long-term asset and having a property that blows up in your face.
Mechanics of Buying Property Sight Unseen
#1 Have a broker, investor, bird-dogger, wholesaler, or consultant on the ground
It can be a red flag if you hear someone say that they have someone on the ground because it sounds like they have a really established network that can get the highest return on investment anywhere. It is too good to be true. If the person is a local in the area you are buying, it is easier to believe them.
How can you trust the person that you have on the ground? Get testimonials about the person that is representing you or helping you find the ideal investment. Use a site with accurate feedback about the person you are working with.
#2 Have a contractor on the ground
The property that you buy sight unseen might need repairs. If you get access to property addresses during due diligence, get detailed quotes from contractors that are on the ground to estimate your returns after budgeting for repairs. Prepare a spreadsheet of the cost per item that needs to be repaired and hold your contractor accountable to the budget and a schedule. Use the spreadsheet as a contract. Negotiate a penalty if the contract is broken. This detailed spreadsheet idea for contractors came to me from a BiggerPockets blog post.
Accessing the seller directly might be more difficult while buying property sight unseen. You might prefer having someone that you can trust help you from a distance. Usually you would want to deal directly with the seller. It is more difficult getting direct access to the principle seller while out of state or out of country.
One way to deal directly with the seller includes mail drops to zip codes that have a great return potential.
You can acquire the best real estate deals in the world sight unseen. Have people that are on the ground help you close transactions.
This article is by Michael Sadler, the Founder of Access The Flock Real Estate Marketplace where he helps Real Estate Professionals make money accessing cash buyers and motivated sellers. Follow on Facebook, Twitter, Google+, YouTube, LinkedIn Group, LinkedIn Personal.
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