Omaha is a great place to invest! This post covers 5 tips for out of state investors looking to expand their portfolio in a stable, but growing market.
Many investors are feeling tapped out in their home market. Perhaps there aren’t enough properties available, or the prices are too high, or the performance isn’t ideal, or you might want to diversify your portfolio to control for risk. All of these factors drive investors to look to other markets. As you do, there are a few things to keep in mind before making an investment in a property out of state.
The process can be very rewarding as you will be open to an endless number of new opportunities. However, there are some things to be cautious of when buying a house out of state or sight unseen. Below are just a few of our tips to help out of state investors buy properties in Omaha and the surrounding areas.
1) Resarch the Downside
While we fully support investing in multiple markets, there are some risks and downsides to be aware of. First, you’ll need to file taxes for every state where you have an income. That complexity may slow your accountant down, so many investors ensure they collect a few properties to justify the expense before moving to the next state. Second, many cities have specific regulations that impact your expenses and options. Be sure to research them carefully before buying a property. Again, it makes sense to gain momentum in one community before moving on. Third, you will need an in-state team for each state/community. Property management is arguably the most critical element of success, but you’ll also need support for legal, repairs, insurance, etc. One well-connected resource can bring together everyone you need. Fourth, you might consider a legal entity for each state to protect your identity and other assets.
2) Watch Out For Scams
You may choose to visit each property before buying or work with someone out of state to make the sale. Either way, you need to be careful. There are scam artists and con-persons who prey on people in every situation. They will take advantage of you not being physically present, though there are many scams where people visit the property and are still scammed. YouThey may overcharge for the property, not disclose serious defects, or have no right to sell the property. These scams can cost you a lot of money. If you want to buy a property out of state, make sure you are working with a team of people you can trust.
3) Research Neighborhoods
You can learn a lot about a neighborhood by reading about it online but you really need to spend time in the area yourself to get a feel for what its like. Whether renting or flipping, knowing what the neighborhood is like will help you find the right property for people who will want to live there. Is it an up and coming area or an established neighborhood? Take time to look at different neighborhoods and talk to people who live there. Another option is to contact people in online forums to get the real story about a property or neighborhood.
4) Research Properties
Most information you might need is now accessible online for free. Real estate sites show sales history, add-ons, and other details of a property. You should also become familiar with the county appraiser’s website. Do as much research as you can on a property. Don’t rely on photos alone because they are often touched up and recolored. Ask if a video tour is possible, or make the trip to view the property in person (we have great ice cream in Omaha that is worth the trip). It’s wise not to buy the first house you identify. Take the time to research multiple properties without becoming attached to any of them. Watch for market trends, changes, and fluctuations.
5) Hire A Representative
If are not able to visit the property before signing on the dotted line, you can hire someone to see if for you. Some people use a home inspector since they will look for the defects. Others rely on an agent since they enjoy touring homes, though they may want a commission. You can also hire someone in the real estate business without a vested interest in this property. Hiring a 3rd party to visit the investment will give you a much better idea of the property. Ask for honest opinions, photographs, videos, and measurements of the property.
A representative can also give you information about the neighborhood and the street. If you’ve never visited before, and don’t plan to before signing the contract, be sure you are able to get a real feel for the area as well as the property. Great property in a bad neighborhood isn’t going to do much for you in the long run. Understanding how the neighborhood fits into your strategy will help you plan for success.
6) Work With A Professional
Purchasing investment properties is much simpler when you work with a professional buyer and seller, especially if you are out of state. For example, Chenoa Investment has visibility to a wide inventory of available properties and the information you need to evaluate them. Instead of buying blindly, you’ll have the insight you need to get a great deal and the peace of mind you need when buying from out of state. If you are a remote buyer or new to the process, find out how we can help you avoid many common mistakes out of state buyers face.
There are great resources to help you buy from outside of Nebraska. For example, we can support remote closings, detailed property information, and virtual tours. Once you get the hang of it, you’ll feel like you are here. If you want to learn more about our tips for out of state investors, we would love to talk to you. We make it simple to invest in Omaha real estate no matter where you live.