It's been a while since the last blog post and quite a lot has happened since! Last time, I told you guys that I was going to Tennessee and here's how that trip went.
We started out deciding to drive from New York to TN as a cost saving effort, and that took over 16 hours and 1 time zone to drive!! I think a flight from NY --> TN was about $350 per person and we had 3 people, so the cost of flying out there would have been over $1,000. To drive to Tennessee, we spent like $200 on gas, Dairy Queen, etc. You could try to figure in the opportunity cost of driving down, but I think that we did spend our time on the best use.
Driving down was a pretty big commitment on our part to do the due diligence necessary to make a solid investment decision. Without knowing exactly where our investments will be, which block/zip code it will be on, what the surrounding houses are like, what the neighbors are like, I wouldn't have the faith and courage needed to pull the trigger and fully invest in Tennessee.
When investing in out of state real estate, the most important thing that I've heard and subsequently learned is that you need "boots on the ground". Some guy/gal who is 100% local and knows the market and has prior experience. On the flip side, you could invest in your local market and you'd be that person. Either way, unless you have that local knowledge you'll be somewhat limited in your market.
Let's take a look at the above statement in bold. Why is that the case? Here's a progression of where I was prior to going there and meeting out local guy:
- Go on these websites searching for real estate
- Finding "cheap" properties in
- Wasting time analyzing some of these "cheap" properties - like searching how much rent & expenses should be in each zip code
The problem are these "cheap" properties. You think it's cheap because the price point is low so it's sort of attractive. However would you be comfortable investing in what some people call a "war zone" area? That doesn't sound fun to me... Also how would you know exactly how much these properties could rent for? Do you have existing rents for the area?
Without knowledge of all of the above (those are the bare minimum you need to know) you can't really have the faith to put your hard earned money in an investment. So what I suggest is going on a website or asking around to find someone who lives in an area that interests you. Ask them to lunch/dinner or a phone call. This is one area that I am working on too so if you need motivation (as do I), let's keep each other updated :)
