How Do I Buy Real Estate From A Different State

How Do I Buy Real Estate From A Different State

John: Hey, this is John Sonmez from
I’ve got a question here today that is not on the software side, it’s on the real estate
side. I’ve done a few of these types of videos. I know a lot of you are interested
in—You’ve read in Soft Skills about how to do real estate investment and you’re
interested in some of the real estate investment advice that I have so that’s what this one
is going to be about. I got this question from Nadir, I think it’s
Nodir. I always mess up these pronunciations but it seems like Nadir or Nodir. Sorry if
I’ve messed up your name here. Just send me a comment and let me know. Anyway, it says,
“Hi John, this is coming full circle. I already benefitted a ton from your career
and health/nutrition advices. This is one is a real estate question. I’m planning
to buy a rental apartment in a different state where I’ll be living 5 years from now. I
would love to hear your suggestions about buying real estate far from your current location.
Thanks again and keep up the great work.” This is an interesting thing. Buying real
estate of state, well, I mean buying real estate in general there are some basics which
I’ve talked about in some of the other videos. Essentially you want to make sure that it’s
a sound investment that the rent is going to cover all of the things that—the mortgage,
the insurance, the property management fees, all of that.
I mean the first piece of advice I would give you in any kind of investment is to make sure
that you do your due diligence and check it out. Make sure that you’re going to be able
to rent this out for more than or preferably with a decent buffer more than what is going
to cost you to carry the property. Do not invest for speculation unless you like to
gamble. That’s not really investment, that’s called speculating and so I’m not going
to advice on speculating because anyone can strike it rich in speculation. It’s the
same as gambling. But as far as investing you have to have the clear fundamentals that
are going to make this a good investment. That’s not going to matter where you’re
at, whether you live in the same city or not and that’s the key. The only reason why
I’m bringing up this, by the way, is because you’re telling me that you’re going to
move there in 5 years. What I don’t want you to do is to say, “Well, in 5 years the
price of this property is going to grow.” You don’t know that. It might shrink. It
might go down. If you make a solid investment for the long term, if you’ve figured out
that the rent is going to cover the mortgage and whatnot and that’s going to give you
a good investment then that makes a lot of sense, so first you start there.
The second thing I would say is that you have to get good property management in place.
I’ve actually bought a lot of properties out of state. In fact, I’ve bought properties
in state site unseen which is going to sound a little bit crazy here, but when I lived
in Boise, Idaho I bought a property that was about an hour away from me in Caldwell but
I did my due diligence, I checked out the property as far as the income and verified
the rents and I had an inspector go out to the property and I had my real estate agent
and I actually never went out to the property before I bought it. I just bought the property
site unseen because—now, this wasn’t my first property, but I had enough confidence
in those fundamentals and I had a good property management in place that I was sure that I
didn’t need to see the property. Why did I need to go out there and see that create
a bunch of worries for myself when the fundamentals were telling me that this was a good investment?
I’ve done that out of state as well. The key thing though is that those fundamentals
are there and then, again, the property management company is going to be the biggest thing that’s
going to determine whether or not this becomes a headache for you or not. You find a good
property management company. Now, I fired lots of property management companies
because most property management companies are, let’s see, how can I put this politely?
They’re scumbags, right? They are looking to swindle you. They’re looking to drum
up all kinds of fake charges to be able to really make a lot of money off of you because
most investors that they work with are very unsophisticated. They own one rental property
and they’re right for being taken advantage of. I mean the whole real estate industry,
by the way, if you’re going to get into this you have to realize that a lot of real
estate agents are scumbags. A lot of people, 95% of the lenders and all
the people that you deal with in the real estate industry, sorry if you’re watching
this and you’re in the real estate industry, but you’ll probably agree with me, perhaps
you’re the 5% that’s not a scumbag. But having my own real estate license, investing
in real estate for the last 20 years I can tell you that there’s a lot of sharks out
there that are looking to take advantage of people. It’s like the used car industry,
the used car salesman. It’s the same type of stigma and it generally applies.
Be very, very careful when you hire a property management company. Interview several of them
especially if you’re out of state. You’ve got to do your due diligence here. Make sure
that they’re good. Call their references. Actually call the references. You wouldn’t
believe how many times when I hire someone professionally, when I call the references
that that becomes a deciding factor. People will give references and then you’ll call
the reference and the reference will tell you the truth and tell them that they’re
crap. You’d be surprised. The reason why people give those references
is because they think you’re bluffing. They don’t think you’re actually going to call
because 90% of people don’t so they’ll hand out that reference sheet and that reference
sheet will actually have really valuable information, definitely do that with property management
companies. Interview them, check it out and make sure. Once you’ve got that set up and
you’ve found the good deal, then it doesn’t matter. You don’t even have to fly out to
sign the contract. You can buy that property completely site unseen out of state as long
as you’ve done your due diligence. One last piece I’ll tell you with this is
hire an inspector, a good property inspector. You want someone who will tell you every defect
that is wrong with that property. Find someone who you can trust as a property inspector.
If you’re going to do multiple purchases out of state you’re going to create your
network there, you’re going to find a good real estate agent that you trust, you’re
going to find a good inspector and you’re going to find a good property manager. You
can use them to check on each other. This is another really cool thing is you can
have the real estate agent give you an idea of the property management company and the
inspector and you can have the inspector give you an idea on the—because they’re all
connected. You can even hire someone outside. Let’s say that you’re going to hire one
property management company. Call up another property management company and say, “Hey,
I’m not going to use you guys, but if I paid you X number of dollars would you give
me a report on—would you act as an adviser to me in finding a good property management
company in the area?” You’d be surprised. This is a good technique
to use. Anytime that you have a professional you can pick another professional against
that professional and pay them some amount of money in an advisory role. They know they’re
not going to get the business themselves so they’re not going to be partial, but they’re
going to get money for just giving their advice which a lot of people would love to get money
for giving their advice. This works in a lot of industries surprisingly.
If I hire a contractor actually to work on my house to do some kind of projects on my
house oftentimes I’ll hire another contractor and I will tell him, “You are not going
to get this job, but you are going to act as an adviser. Will you accept X amount of
dollars to make sure—to do the due diligence because I don’t know anything about woodworking.
Can you make sure that this person that I’m about to pay $5000—can you check his work
after he’s done? Can you do this and how much would you charge for that?” Well worth
that money. Anyway, we’re getting a little bit sidetracked
here but basically if you’re going to buy property out of state just make sure you do
the due diligence as much as possible especially if you’re not going to be present and that
you have someone that is going to represent you that you can trust. That property management
company is going to be the key there. All right, well that’s it. Good luck with
this. Unfortunately this is something that is probably going to take some trial and error
so start small I would say because you might make a mistake here and it could be costly.
It takes some time to figure this all out. Don’t take all your life savings and put
it into one property on this one bet. Start small and see how that works out for you.
I wish you the best of luck and let me know how it goes. Hopefully you get a property
and you can make a good investment there. All right, if you have any questions, even
some real estate questions, you can email me at [email protected] I won’t
do as many of those just because this channel is mostly focused on software development
but I believe in a holistic view so you’ve got to get everything under control. If you
really want to be successful in life you can’t just focus on your career. You’ve got to
know finances. You’ve got to know fitness. You’ve got to know all these things. So
yeah, so thanks for watching this video and thanks for the question and don’t forget
to subscribe. Talk to you next time.

5 thoughts on “How Do I Buy Real Estate From A Different State

  1. Sounds like solid advice. Thanks!

  2. This is glorious, been searching for "i want to invest my money in real estate" for a while now, and I think this has helped. You ever tried – Ponasson Estate Earthman – (Have a quick look on google cant remember the place now ) ? Ive heard some awesome things about it and my friend got great results with it.

  3. Notes:
    1. Make sure Rent > Cost (insurance, PM, utilities, property tax)
    2. You don't know it will go up/down, make a solid investment #1 Again.
    3. Good PM- interview them, call their references, and listen to reviews.
    4. Hire property inspector (good one)
    5. If you keep buying out of state, Create network in area, Agent, Inspector, Property Manager.

  4. Wow this is probably one of the most practical advice – pit professionals together! Thanks John

  5. great advice!! Thank you.

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