5 Crucial Investment Criteria for Out-of-State Turnkey Investors

Key Takeaways:

– Many single-family rental investors look beyond their local market to diversify their portfolios
– Researching the market, financing, home sales data, rental demand, job market health, etc. is crucial
– Focus on five essential elements of due diligence: excellent turnkey provider, clean inspection, minimized inconvenience, key location, attention to detail
– Importance of getting your own inspection and choosing a turnkey partner wisely
– Consider what renovations may be needed to make the property more appealing and user-friendly
– Location is a key factor in the success of the investment property
– Trustworthy partners who value quality and excellence are essential for successful out-of-state investing with turnkey properties
– REI Nation offers stress-free real estate investing with a focus on customer success and financial goals
– Disclaimer: Opinions in the article are those of the author and not necessarily representative of BiggerPockets

BiggerPockets:

This article is presented by REI Nation. Read our editorial guidelines for more information.

Many single-family rental investors look beyond their local market to diversify their portfolios and benefit from market variety. When these out-of-state investors start, the first thing they do is research the market. They look at financing, data on home sales, rental demand, price points, local industry, job market health, etc. 

Up to a certain point, the properties themselves don’t matter. After all, it’s not a personal residence. You don’t need it to suit your tastes. 

At the same time, certain things about the investment properties you buy matter—a lot. As you navigate the world of single-family investing, focus on these five essential elements of due diligence.

1. An Excellent Turnkey Provider

If you’re buying remotely, you’ll need a turnkey partner. The definition of “turnkey” varies, so you’ll want to thoroughly investigate exactly what’s being offered versus not. Ideally, you’re looking for a company that owns and invests in the properties they’re selling. They’re not middlemen. They are just there to broker a deal. They should have experience, well-developed operations, and in-house or highly trusted partners for property management and renovations.

Ask hard questions. Do your homework. Know their mindset and philosophy. And most importantly, know what you want and need so that you can choose a partner that aligns with your vision.

2. A Clean Inspection

We can’t stress this enough: No matter what property you buy or who you buy it from, get your own inspection. Remember, turnkey might mean something different to everyone. Problems you consider big might not be significant to the seller or turnkey provider. 

It’s worth repeating: Get your own inspections done. Never waive them. You may want to go above and beyond for peace of mind—get the crawl space looked at and ensure your pain points are addressed. 

Remember, you’re not likely going to be there for any final walk-throughs or see things for yourself in person. You need trusted eyes and ears on the ground.

3. Minimized Inconvenience

In addition to considering what your ideal residents want, consider what they don’t want. We’ve all seen properties that are just…off. Weird layouts, outdated design choices, quirky features—while these might be things someone likes, most people won’t. 

You want to focus on ergonomic, appealing, and convenient properties. If they aren’t presently like this, what renovations would it take to get it there?

Sometimes it’s hard to see how inconvenient or frustrating a property can be until you’ve lived there for a while. That isn’t an option in this case, so anticipate needs and pain points. Listen to feedback as you go and seek out solutions. The more user-friendly a property, the less likely residents will have a reason to leave at the end of their lease.

4. Key Location

Location matters in both a broad and a specific sense. It’s the one thing you can’t change about a property. Be strategic. An imperfect house can be improved over time if the location is ideal. 

At the same time, a perfect property in a poor location may have trouble staying occupied. Be mindful of the specifics.

5. Attention to Detail

You’re investing from a distance. Sometimes, it’s hard to know all the details, let alone focus on them. This is where your turnkey partner and property management team come into play. From the very beginning, you should only be with partners you trust to uphold a standard of excellence you can sign off on. They’re the ones who will see things and fix things—or not. 

Sloppy renovations and corner-cutting maintenance efforts aren’t good enough. Leave your property in the hands of people who value quality from every angle. No investment property will be perfect—but they can get close! Choose stewards who show pride in their work and value your investment.

Ready to start investing out-of-state? Take the worry out of investing out-of-state with our FREE guide to remote real estate investing.

This article is presented by REI Nation

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Ready to add turnkey real estate to your portfolio in 2024? If so, now’s the time to invest with REI Nation. Where you invest, and they handle the rest.

Discover stress-free real estate investing with the largest family-owned turnkey investment company, REI Nation. Whether you’re a seasoned investor or just starting, they are dedicated to helping you achieve your financial goals in the world of real estate investing. Visit our website to start your turnkey real estate journey, where your success is their commitment.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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Property Chomp’s Take:

Are you a single-family rental investor looking to diversify your portfolio beyond your local market? If so, you’re not alone. Many investors are turning to out-of-state markets to benefit from market variety and potential opportunities. But before you jump in, it’s essential to do your due diligence and focus on key elements that can make or break your investment. Here are five essential elements to consider when investing out-of-state:

1. An Excellent Turnkey Provider: When buying remotely, a reliable turnkey partner is crucial. Look for a company that owns and invests in the properties they sell, has experience, and offers in-house or trusted partners for property management and renovations. Ask tough questions, do your research, and choose a partner that aligns with your investment goals.

2. A Clean Inspection: Always get your own inspection done, no matter what property you’re buying or who you’re buying it from. Never waive inspections, as problems that may seem minor to the seller could be significant for you. Having trusted eyes on the ground is critical when you can’t be there in person.

3. Minimized Inconvenience: Consider what your ideal residents want and don’t want in a property. Focus on ergonomic, appealing, and convenient properties that are user-friendly and less likely to drive tenants away. Anticipate needs and pain points, and seek out solutions to make your property more attractive to renters.

4. Key Location: Location is a key factor in real estate investing. Be strategic and choose properties in ideal locations that will attract and retain tenants. An imperfect house can be improved over time, but a poor location can be a significant obstacle to occupancy.

5. Attention to Detail: Investing from a distance can be challenging, so it’s essential to work with partners who value quality and excellence in their work. Choose turnkey providers and property management teams who take pride in their work and prioritize your investment’s success.

Investing out-of-state can be a lucrative opportunity, but it requires careful consideration and attention to detail. By focusing on these essential elements of due diligence, you can set yourself up for success in the world of single-family rental investing. Ready to start investing out-of-state? Consider partnering with REI Nation, the largest family-owned turnkey investment company dedicated to helping investors achieve their financial goals in real estate. Visit their website to learn more about stress-free real estate investing and start your turnkey real estate journey today.