Posted by Deb Van on May 15, 2007 at 19:30:12:
Thanks Chris!
Deb
Purchasing out of state property online - Posted by Deb Van
Posted by Deb Van on May 14, 2007 at 18:25:21:
Maybe some of you have searched the online auctions for investor properties and I thought I would ask if anyone can share experiences. I’ve noticed there are some affordable opportunities in Indiana and Ohio in watching the online auctions. Before I would venture into this, I think it would be wise to find a good realtor in those areas who can give me the comps and dom as I would be interested in a flip. Also, would need an appraisal and someone to inspect to let me know what repairs are needed. Can any of you comment on what pitfalls to avoid? I live in NC.
Thanks,
Deb
Re: Purchasing out of state property online - Posted by Christen
Posted by Christen on May 15, 2007 at 14:47:48:
I auction my property on e-bay. I buy multi-families, rehab them and then sell them and carry the financing for the buyer. I auction my properties online simply because the listing fee is lower than the cost to run an ad in my local paper and I tend to get more $ for a downpayment. Once these proeprties sell, I am not out of them, I agree to manage if need be, I’m also there for any maintenance or repairs, and I am selling the properties completely remodeled, so there is a certain expectation from a buyer that there is lttle to no deferred maintenance, these are not junkers by any stretch. our area central NY has a decent economy, good job growth, the properties rent fast and cash flow. I also provide the buyer with a state certified appraisal before closing.
Re: Purchasing out of state property online - Posted by Kristine-CA
Posted by Kristine-CA on May 15, 2007 at 14:29:51:
I suggest that you avoid the properties being sold at auction.
Remember that auction environments are often a marketing tool that
creates an environment that favors the sellers. That being said, if you
are seeing prices and properties in areas that interest you, do some of
your own research to see what’s for sale and what rents are. Look at
craigslist and local real estate agent websites. Look at online
newspapers. I don’t recommend buying without checking out the area
in person at least once.
My own experience checking out low valued props in areas such as
upstate New York, rural mid-west and areas around Detroit and Flint,
MI is that it truly is a buyer’s market with tons of cheap properties to
choose from and not a lot of room in for flipping. Flipping would be
more appropriate if you could be in the area more to find the deals no
one else is finding or if you could assemble a crew to do rehabs.
Just my two cents, but be careful about the auctions. Kristine
Re: Purchasing out of state property online - Posted by Rich-CA
Posted by Rich-CA on May 15, 2007 at 14:06:40:
I would add to the posts I had done before that Chris WFL thoughtfully included that you need to look at the economics of the area. I typically look at certain areas for stable growth:
- Jobs. An area needs to be adding jobs, preferably in substantial numbers and in the pay range you would be targeting as your market. Job growth equals price and or rent growth, because you have more people competing for your product (sale of house or rental unit).
- Economic growth, specifically growth in wages. As people have more income to spend, it becomes easier to ask for and receive higher prices or rents because more people have the money to spend.
- Low taxes. Specifically, taxes that affect you as the landlord. For example, personal income taxes only affect you if you earn more than the minimum in the state you are doing business in. Property tax is 100% in your expense column. In Phoenix, the local portion of sales tax means you need a license and to add tax to the rent. Know what taxes are in “your column” and how much they are.
- Regulations. If your chosen state has a lot of regulations regarding tenant-landlord relationships, use of property, holding of security deposits, and so on, then you will have more expenses in running your business there. Rent control areas are very bad if you use a buy and hold strategy. So are laws or judges that make evictions harder. These all increase your operating costs.
Specifically Indiana and Ohio. It is my understanding that the economics of these states is not good. There are long times to get a unit rented, the rent levels are not enough to cover costs once you factor in these vacancy times, the job situation is declining rather than improving with the people who make better tenants leaving the state for greener pastures. Often when house prices look like a bargain, they are for a reason. You need to dig and see why prices are the way they are (for example, in TX, where I have some houses, the property tax is 3%, which acts like an anchor on house prices). You need to “pre qualify” the chances of an area’s improving and growing before you invest. if you think its a turn around situation in the making (and these are the best opportunities for a solid profit), you need to be able to explain to a third person why this is the case (I use the third person explanation to help counter the natural tendency to “talk ourselves” into something that we have decided is good but cannot justify based on the facts).
For example, A couple of years ago, a friend asked if I had considered Albuquerque as a location to invest. I hadn’t, so I started looking at the economics. People had said it was a growing area, but the increase in jobs in the wage segment where my target market was (lower middle class) did not support such a claim. When I started interviewing agents and managers, I found that agents are often optimistic but when questioned could not support their optimism. Property Managers would give rents and time to fill vacancy numbers that required 60% down just to break even (between the 250K house prices and 4 month vacancy norm between tenants and $950 per month rents this was not a good investment). So I decided against Albuquerque. The numbers just did not support it being an investments but rather a lottery ticket.
Bottom line: research the area you want to invest in. The specific city since markets vary a lot within a state. Make sure the outlook is positive and the numbers work. In the process you will have weeded out the good Team members from those peddling fluff. The good ones are the ones whose advice matches the facts and are not afraid to tell you what those facts are. Then you can make a good decision.
BTW: I did look at Indiana, but the decline of the “rust belt” industries is not quite offset by the growth of replacement jobs, so I would be wary. Ohio, however, is not in a good economic state right now.
Assemble your Team - Posted by Jimmy
Posted by Jimmy on May 15, 2007 at 07:53:59:
You CAN invest from a distance. but there are no shortcuts. Once you identify a location that meets your criteria, you need to make critical contacts. that might include a property manager, a realtor, tradespeople, whatever. a well-connected property manager often has a big network of people already in place.
understand that you will continually be ungrading your team in your quest to engage the pros and eliminate the schmos.
Re: Purchasing out of state property online - Posted by Chris WFL
Posted by Chris WFL on May 14, 2007 at 23:32:44:
Compliments of Rich CA
Talked about a few days ago here:
http://www.creonline.com/wwwboard/messages/44728.html
http://www.creonline.com/wwwboard/messages/44812.html
Re: Purchasing out of state property online - Posted by Deb Van
Posted by Deb Van on May 15, 2007 at 19:18:44:
Hi Christen,
I am looking to pay cash, then refinance to do rehab , then flip. Have you done any flips with your rehabs?
Thanks,
Deb
Re: Purchasing out of state property online - Posted by Deb Van
Posted by Deb Van on May 15, 2007 at 19:16:02:
Thanks Kristine,
Yes, I would certainly do alot of research. Before purchasing a property, I need to team up with a good agent in the areas I’m interested in so they could let me know comps and dom. I’m interested in dom because at first , I only want to flip. I’d probably fly into the area to see it also.
Thanks,
Deb
Re: Purchasing out of state property online - Posted by Deb Van
Posted by Deb Van on May 15, 2007 at 19:29:13:
Hi Rich,
I hadn’t researched deeply into the economics of Ohio (not yet anyway). Some of the houses I saw ran 8-10K. I figured I’d pay 10K, put in maybe 10K to fix and then flip for 35-40K. But, I realize I’d have to fly in to look at the property. Also, I need to make connections with a good realtor there who knows the market. Thanks for your comments!
Deb
Re: Assemble your Team - Posted by Deb Van
Posted by Deb Van on May 15, 2007 at 19:31:34:
I agree, good contacts are critical to my success!
Thanks,
Deb