It can be a beneficial skill to have if you invest in properties, especially properties in other states or countries. The taxes may work more in your advantage in that location, or it might just be a great market with growth opportunity.
We will go through some of the precautions, warnings, and pitfalls when purchasing a property sight unseen as well as some tips for doing so; however, our advice is never to make a large purchase without thorough research.
Pitfalls, Precautions, and Warnings
An excellent realtor can make anything look good on paper. We all know people who have fallen for get-rich-quick schemes, whether they be of the essential oil or time-share quality. Though pyramid schemes are different from purchasing a property without first evaluating the community, it can be just as risky, as there are easy ways to be sure you are investing in the proper place.
The Charmer
If you’re looking at a property outside your city, you may run into sellers who subtly (or not) try to dissuade you from seeing the property. Using charming but evasive language, they’ll convince you that not only are they trustworthy but a godsend. These types of sellers will advertise everywhere except the market they are actually in, so keep an eye out for such things.
Pretty Pictures
Time to take advice from our myspace days. Remember, “she’s got the angles… there’s no full picture”. Well, be careful of “the angles.”
I once rented a room in a beautiful home in a state, but I had yet to move in. When I got there, I realized the truth. The craigslist picture of this house had “the angles.” Come to find out I was staying in one of three model homes in a big empty gated community. There was no other house built, and the developer cut his losses and rented out one of the models. It was very “Arrested Development-esque.” Luckily, I was just renting and ended up enjoying being the only occupied house on the block.
Nothing looks more legit than a beautiful glossy brochure with professional typeface and a picture with all the angles.
Not only that, but there have been many people finding ways to scam people looking to buy property, even going as far as “selling” property they don’t even own. That’s why it’s essential that if you don’t go down and see for yourself, you find someone you trust to do it for you.
Going Against Our Advice: Harm Reduction
If you are determined to go against our advice and purchase a property sight unseen anyway, this section is for you. There are investors out there who are quite successful and purchase properties without seeing them as a regular practice, and there is a certain percentage of us investors who are both hard and hot-headed. “I’ve seen the pictures, and my bro saw the property. What else do I need?”
For those who it is regular practice: they are adepts. They make many purchases a month, and personally seeing each property is just not feasible. They work with people who they trust, and both have an equal stake in things going smoothly. They have a tested structure for making these kinds of purchases without seeing them themselves.
There are so many strategies and ways to ensure a lower risk when buying sight unseen, but here are the most significant ways to reduce risk:
- Shop around a lot.
- Only buy sight unseen if it’s your only option.
- Be sure you are working with a real estate agent you trust.
- Send a representative, a sibling, or a friend who lives nearby.
- Don’t just accept what you’re told and the photos you’re shown at face-value.
- Include contingencies that leave room for the unexpected, like new information or discoveries uncovered during the due diligence process.
- Do inspections by someone who knows what they’re looking at, even if it’s a “fixer-upper.”
- See the property as soon as you possibly can
- Hire a trusted property management company to help you run things from afar.
That’s about all the help we can offer. The bottom line when it comes to buying a property sight unseen: don’t do it unless you’re set up to do so and have plenty of experience in investment properties.