5 Reasons to Buy Property Out of State
Archives: Daily Issues
Issue #2534
- WEALTHY: Is long-distance investing a bad idea? (Dean Graziosi)
- HEALTHY: Dropping pounds together (Craig Ballantyne)
- WISE: Warren Buffett on getting rich
ALSO IN THIS ISSUE:
- 5 ways to get your “vote” across (Suzanne Richardson)
- Denny Hatch’s opinion of “easy-way-out” marketing copy
- It’s Fun to Know… was George Washington really the first President of the United States?
- Add “perfunctory” to your vocabulary
== Highly Recommended ==
He Might Be a Very Successful Investor, But You’ll Never See Him on CNN!
The Wall Street financial jackals extract their “take” from investors just like you.
They perpetuate the myth, “Buy into good companies and hold on for the long term.” Sure, sometimes these stocks go up, but they also go down. In the meantime, these greedy insiders make money either way. They can do it because they’re playing with a whole different set of rules.
One Wall Street Insider has jumped ship and started on his own path to profits. And he’s ready to give you all of his insider secrets so you too can make money no matter what the market does.
Of course, he wants to keep making these cash withdrawals himself… so he can only share these secrets with a limited number of folks. If you want to stop being one of the sheep and join him at the table of success with all of those blueblood financial elitists, please read the following report.
“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”
Warren Buffett
5 Factors You Must Consider Before Investing in Long-Distance Properties
Some of the most successful real estate investors you’ll ever meet will tell you one thing: Invest where you live. This is the advice I give to my students, especially if they’re newbies. Though you may hear about hot areas a hundred miles or more away, think carefully before investing there. Why? Because it’s difficult to gain thorough knowledge of a market area if you aren’t living there. And even if you can get a snapshot of knowledge that can carry you through a successful purchase, you won’t be around to notice the nuances of change that could signal the need to sell before problems set in.
Another obvious argument for investing where you live is that it gives you the ability to watch and manage your properties – a task that is neither easy nor inexpensive when they are a distance away. And that’s the argument most seasoned investors focus on.
Still, I know from experience that investing in far-flung areas can be profitable.
For example, I live in Arizona. But not long ago, I invested in properties in both Iowa and Illinois – more than a thousand miles away. At the time, job growth was strong and rental income was going through the roof. I have a student named Matt who lives in the Iowa/Illinois quad city area, and I partnered with him on a few deals.
A local quad city bank noticed that we were buying houses and came to us with a commercial property valued at $2.5 million. The bank had it in foreclosure, and wanted to get it off their books. They made us an offer that included a 5.5 percent interest rate for five years. One-third of the property was already rented to tenants, and the bank agreed to rent back the remaining rental space for us. After our back-and-forth counters, the sales price came down to $1,596,000. Right now, we get a cash flow of 20K a month, with the bank renting out the space. Once we get tenants in at market rents, our cash flow will more than quadruple.
Another deal Matt and I partnered on was a bank-owned foreclosure valued at $400K. We made an offer of $162K, they countered, and in the end we got it for $164K. The current market value is more than twice our purchase price. We can rent it or list it. Either way, we make a super profit.
If you know and trust someone who understands a “long-distance” area you’re considering investing in, he may be able to help you gain – and maintain – the very thorough knowledge you need to make smart decisions. That would include an understanding of these five market factors:
Long-Distance Investing Factor #1. How does your market relate to the big picture?
Location is always important. Even in an economic downturn, certain areas of the country can be extremely attractive because of such things as job availability. Watch national real estate price indexes like the Case-Shiller Index and the OFHEO (Office of Federal Housing Enterprise Oversight) Home Price Index. When these indexes are improving or looking bleak, what are the factors causing the rise or slide? Are they factors that can also influence your micro-market, be it a neighborhood or a city?
Long-Distance Investing Factor #2. What makes your market special… or not?
You also need to ferret out local trends or strengths that make your market area different, unique, or robust. Is industry or commerce moving in? What will keep area values strong or appreciating?
Neighborhoods with a strong job base fare well even in a bad economy. Baby boomers needing healthcare keep communities that surround medical centers hopping. Companies that are going “green” are also attractive to live near. Is the local government providing tax incentives to lure business? There is a trend for people to want more clean, open space in their environment. Is your market area moving in that direction?
Be thorough and objective in your analysis, as it can make the difference between success and failure.
Long-Distance Investing Factor #3. Is local government helping or hurting your chances?
We touched on this in Investing Factor #2 – but, other than attracting new businesses and planning for more parks and green space, there are ways in which government, or even subdivisions, can influence market direction. In particular, there is a tendency for people to resist change, to maintain what they have even if it means throwing up obstacles to prevent growth in certain residential areas. This can sometimes be good for prices, sometimes bad. It’s hard to predict which.
Here are some of the requirements imposed by governments and associations that added to the cost of building and, thus, helped prices rise during the real estate boom:
- An increase in minimum home sizes
- An increase in lot sizes
- Forcing builders to reserve green space
- Requiring wider streets, more street lights, etc.
Ultimately, requirements like these usually slow or impede growth. On the flip side, you don’t want to see rampant growth allowed, with poor zoning and little attention to quality of life, traffic, and safety issues.
Long-Distance Investing Factor #4: What do the numbers say?
Real estate investment requires a great deal of diligence in analyzing purchase price versus value, rental outlook, and other financial factors. What are the rents maxing out at for comparable properties? What are these other properties experiencing in the way of vacancy rates or non-payment of rents? What are existing capitalization rates? (The cap rate is the ratio between the net operating income produced by the property and its original price or its current market value – and it is an indirect measure of how fast an investment will pay for itself.)
Are there condition factors that might be important? Are many of the multi-family properties in the area in poor condition or lacking amenities wanted by today’s renters? If so, that isn’t necessarily bad – especially if you’re going to end up with a property that is in much better condition than others in the neighborhood.
Don’t do the numbers only on the property you are considering. Have a firm grip on how your potential investment’s numbers fit into the local market.
Long-Distance Investing Factor #5: How firmly are you planted?
We started this discussion with the importance of investing where you live. And when you have a long-distance investment, you are, in a sense, “living” there. So, how does the area appeal to you? Add a sheet to your diligence file. Make it a pro and con assessment of the area as it relates to your own quality of life. If the other four market factors look good for a particular investment, knowing that you wouldn’t mind being there for some time to come could seal the deal.
[Ed Note: If anyone knows about the pitfalls of real estate, Dean Graziosi does. He's a real estate expert, teacher, and author who's been investing since age 18! His book Be a Real Estate Millionaire is a New York Times, Wall Street Journal, Amazon.com, and USA Today best-seller. For an ETR-reader-only special on this book, go here.
Once you've got a solid foundation with Dean's guidelines for beginners, you'll be ready to start learning the techniques that will make you rich. Of course, real estate isn't the only investment that can make you millions. Get some of the biggest secrets to churning out cash from 12 of the world's experts in building wealth. Learn how you could be making $1.2 million or more in 2009.]
== Highly Recommended ==
Ready for Your “Mind-Over-Money Make Over?”
NO ONE ever thought they would amount to anything.
And yet, against all odds they all became billionaires.
What was the “X” factor that made the difference and allowed ordinary men to enjoy the financial freedom that most people could only dream about?
Well, one man knows exactly what it was… He experienced first hand how four “Average Joes” went from ordinary to extra-ordinary.
Now, he’s boiled down every tactic, trait, and “secret wealth attraction strategy” these four billionaires remarkably possessed… And he can give you a “mind over money make-over” in just 30 days that’ll allow you to attract gobs of money like bees to honey.
Ready to finally “Crack the Wealth Code?”
Yes, Your Voice Counts
I was proudly sporting my “I Voted Today” sticker when I ran into a friend.
He hadn’t bothered to vote. Why? He was afraid his vote wouldn’t count.
Of course, that’s just not true. Every vote counts for something – even if it doesn’t swing a state or win an election.
But maybe, when it comes to ETR, you’re feeling the same way as my friend felt. That there’s no point in speaking up.
The thing is, your “vote” counts around here, too.
We read each and every comment our readers make. We take your criticisms into account, we carefully consider your ideas, and we appreciate your taking the time to let us know what you’re thinking and how you’re progressing.
So if you haven’t let us know what you think or how you feel, please do so! Here are five ways you can make sure your voice is heard:
• E-mail us. Have a question? Want to tell us that you particularly enjoyed an article? Jot it down in an e-mail and send it to us at AskETR@ETRFeedback.com. We love to get customer comments – and we depend on you to let us know what we’re doing right and what we can do better.
• Post a review on Amazon. Just finished Michael Masterson and MaryEllen Tribby’s new book Changing the Channel? Finally got a copy of Automatic Wealth? Let us know what you thought – and read others’ reviews – at Amazon.com.
• Start a thread on our reader’s forum. If you want to discuss an ETR article… get feedback about your business idea… or find support for your weight-loss plan, check out our SpeakOut forum.
• Post comments on our website. Did an ETR article pique your interest… or even make you mad? Share your thoughts in the comments section following each article on our website.
• Submit a ticket. If you have customer service issues, we want to know about them. All you have to do is submit a ticket right here, and one of our customer service team members will answer your question or find a solution to your problem.
Worth Quoting: Denny Hatch on Advertising
“Advertising is tough. Some copywriters spend days on a single headline, let alone body copy. Those not willing to put the time and effort into making a product or service come alive in the mind of the reader or viewer, who instead grasp at whatever unrelated bit of cleverness is rattling around their numb skulls at the time, are taking the easy way out.”
(Source: Targetmarketingmag.com)
How to Help Your Spouse Lose Weight
I like being right. And one of the recommendations I give over and over and over again that keeps on getting reinforced by research is the need to have social support when you’re trying to lose weight.
And today, I have a study that proves social support is even MORE powerful than I previously thought.
Researchers from Connecticut, Rhode Island, Ohio, Arkansas, and Pennsylvania teamed up to see if a weight-loss program delivered to one spouse could be “taken home” and have beneficial effects for the untreated spouse as well.
Three hundred and fifty-seven diabetic participants were treated for one year. The subjects were divided into two groups. One group received standard diabetes care, while the other group received intensive lifestyle intervention (ILI) help.
The spouses of the ILI group lost 4.9 pounds over the course of the study, even though they had no contact with the researchers. The spouses of participants receiving standard care lost only 0.51 pounds. In addition, more ILI spouses than standard-care spouses lost 5 percent of their bodyweight (26 percent vs. 9 percent, P<0.001).
One of the big reasons for the weight loss in the ILI spouses was that they ate significantly less fat than the standard-care spouses. And, not surprisingly, spouse weight loss was associated with participant weight loss. That means if your wife was in the study and she lost weight, you had a greater chance of losing weight as well.
[Ed. Note: Online support can be very helpful when it comes to reaching your weight-loss goals. Share your weight-loss struggles, diet and exercise techniques, and encouragement for free right here.
And if you want a topnotch fitness program that can help you burn fat and build muscle, check out Craig Ballantyne's Turbulence Training program right here.]
It’s Fun to Know: Was George Washington Really Our First President?
Was George Washington the first President of the United States? That depends on how you define the title.
The first person to formally use it – sort of – was John Hanson. From 1781-1788, he held the office of President of the United States in Congress Assembled. Not nearly the same thing as the nation’s chief executive. It was more like today’s Speaker of the House. Still, the idea that Hanson, not Washington, was really our first president keeps circulating. It seems to have originated with the claim, in a 1932 book by Seymour Wemyss Smith, that Hanson was our “forgotten” first president. Apparently, Smith picked up this information from an earlier book written by one of Hanson’s descendents… and didn’t bother to check the facts.
(Source: Wikipedia)
== Highly Recommended ==
How a Simple Internet Mistake Can Make You $3,012 in Just Two Days
Actually, you could make more, even faster. By complete accident, one of my colleagues discovered a “back door” to online money-making that is faster and easier than you may imagine…
You don’t have to be pinching pennies anymore because this new online program for raking in some good money works in almost no time flat. That $3,012? My colleague made that in only an hour. No hype, no kidding. Read on to discover how you could do the same starting right now.
Word to the Wise: Perfunctory
Something that’s “perfunctory” (per-FUNGK-tuh-ree) – from the Latin for “to get through with” – is done routinely and with little interest or care.
Example (as used by Francesca Mari in a New York Times review of Doctor Olaf Van Schuler’s Brain by Kirsten Menger-Anderson): “People [Consumer Reports] concluded, actually like going to the doctor: They like the bestowal of paper robes and the perfunctory poking!”
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Copyright ETR, LLC, 2008
I think it is always a good idea to look at long distance investing, especially when the area you live in is not growing rapidly like other areas. The ability to purchase real estate where people are moving to and you can anticipate growth is a key tactic in profitable real estate investments.
I also believe that if real estate investing is not good in your home state, it may not be a good idea to start there. I think it takes an advanced investor to invest in a down state because they seen this happen before and may know were, and how to invest for the rebound.
Another thing is when your investing in real estate it’s about the numbers if the numbers work out, and you leave enough room for era you should be OK. Working with a good team in a long
distance state is also important.
Sincerely