3 Ways to Buy a Property Out of State

Buying out of state properties come with a giant risk. Usually you purchase it without ever stepping foot in the door. Most people in California are attracted to these out of state properties because of their cheap price tags. But how do you purchase a property if you don’t know anyone in that location? How do you find people that you can trust? Here are the three ways that I solved that problem.

1. Find an Agent Through BiggerPockets

BiggerPockets.com is a platform for real estate investors to gather and share knowledge. As mentioned in another blog post: 4 Things You Need To Do To Start Investing In Real Estate, BiggerPockets is a great way for new investors to get introduced to the real estate community. Their informational materials are top notch such as their podcast and books.

Forums Are the Best!

The best part of the site is actually their forums. In the forums you can ask questions about a location and people who are local to that area will tell you all about it. By asking the right questions, I learned what zip codes and neighborhoods were good and bad places to invest in. Through that platform, you can also find local professionals such as agents and property managers.

Through the forums, I found several investor-friendly agents in Jacksonville, Florida. After a quick phone conversation with a few of them, I found one that I jived with. In this business, you want to work with people who understand your needs and have the same attitudes as you do. Once I found the one I wanted to work with and gave him my buying criteria, I had him scour the MLS for properties that worked for me.

After finding a few that were good, I told him to put in the offer at a ridiculously low price. The goal was to get rejected and negotiate afterwards. A lot of agents will refuse to do this for you, you have to find the right one. There are several ways to get around the price objection. You can offer an all cash offer for a faster close or you can offer to pay all of their closing costs. We go over some negotiating techniques in my podcast episode: How To Add OVER $86,000 To Your Profit By Negotiating!

2. Get Connected With an Employee at Auction.com

The second way I purchased a property is by getting ‘consulted’ by a friend of a friend. He worked with Auction.com and knew what the banks wanted for their foreclosed properties. The way auctions work is that the bank has a certain amount of money it wants back from the property. It’s usually the amount it lent out plus fees it paid to foreclose on the house.

They start the bid really low but always bid it themselves if the actual bid isn’t higher than the number it wants. On Auction.com, it will tell you what the property ‘should’ be sold for. In the Bay Area, properties on Auction.com sell for way more than what it ‘should’ be sold for, but properties in other states sometimes sit there for months. So you’re able to get it for cheap.

Since my friend knew exactly what the bank wanted for the property, we were able to purchase it for just $1 more. The property was suggested for $63,000, but we managed to pick it up for just $40,001. After rehabs and repairs, it now rents for $850 a month and is one of my favorite assets to this day.

3. Use Your Property Manager

Property managers have the inside scoop when one of their clients want to sell a property. They will usually let their other clients know first. They get to represent the buy and seller in the transaction AND they get to keep the property in their rental portfolio. Both of his clients are happy, one gets to sell the asset, the other gets a new one. The buyer can be confident that the property performs well and the seller can be confident that the buyer will close on the transaction.

Real estate investing is very much a relationship based business and using your network will help you grow your portfolio.

Property managers are also in tune with what the current rents are. My property manager tells me what rent is in a certain area and with that information, I’m able to determine my purchase price. He’s also goes on site to the properties to let me know if it’s even worth putting an offer on.

Conclusion

These are the three ways to purchase a property out of state: Find an agent from BiggerPockets, get a connection with someone who works at Auction.com, or use your property manager for leads. People on BiggerPockets are really nice and helpful. I recommend it for anyone who’s just starting out. Getting a connection at Auction requires you to expand your network so go to meetups! Using your property manager is another great solution, but you won’t be able to unless you have a property to manage already. Get started now with this post: Things You Need To Do To Start Investing In Real Estate.