“Out of Sight, Out of Mind”— Real Estate Investing from Afar
Ever since I started my real estate investing journey, I’ve come across numerous investors–myself being one of them, who decided to invest in properties that weren’t located in their “backyard”.
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I strongly believe that investors shouldn’t invest within close proximity of where they live, if better returns can be found elsewhere. It will just come down to the investors comfort level, the risk-to-reward ratio they are willing to accept and the established relationships on ground.
Don’t Get Caught in the Minutia!
After striking many conversations at real estate seminars and expo’s, I have found that most novice property investors share the exact same approach when analyzing deals.
They tend to get caught up in unnecessary online research involving stats and demographics of a specific area they are interested in. Although I do believe the stats and demographics to be somewhat important, they should not be the main tool used when analyzing to purchase investment properties in another state or country.
I have witnessed on numerous occasions investors who are solely focused on purchasing the “best” house in the “best” street with the “best” growth prospects, only to experience financial loss, while entrusting their lifetime savings with incompetent and unprofessional people on-ground that lied to them and were dishonest.
From current and previous experience, I have learnt that one of the most important things to successfully invest in Real Estate from afar is to establish trust and relationships with key people on-ground, in the particular areas of interest.
Why the Most Important Things are Trust and Relationships
Trust is built over time and not over one phone call, email, or meeting. Spend that time interviewing and conducting your due diligence, with the main focus being on property management. Property management has been known to make or break a good investment.
Avoid succumbing to any pressure tactics or sale gimmicks enforced by certain operators, as there will always be another good opportunity around the corner.
A great way of eliminating these non-genuine individuals is by informing them that you have no interest in doing any business in the area they work in for at least twelve months. You will be surprised at the lack of responses received. Most of these shady operators will never have your best interest at heart, as they are only looking for a quick profit before they can move on to their next “victim”.
It took me over 18 months to establish trust and relationships with the right people in the US before I bought my first property and later on made the move here from Australia in late 2012.
While I was evaluating where and how I wanted to invest, the individuals I was interviewing were more than happy to go out of their way in meeting all of my demands and answering any questions I had.
Once establishing such relationships, you will find that these individuals aren’t greedy and are looking at building a long term business synergy, while at the same time always having your best interest at heart.
By continuing to network and staying active via email and phone, you too will eventually encounter trustworthy people that can assist you along your real estate investment journey.
Before pulling the trigger and investing from afar— it is crucial to establish long term relationships, due to the complexity of the many micro markets located here in the US. It is amazing to see how the quality of properties in an area can decrease within such a short proximity.
For example here in Toledo, Ohio, where I am based- you can purchase 100yr old properties for $30k that are situated in high crime areas and within half a mile down the road you will be able to find 10-20yr old waterfront mansions selling for $300k.
It is vital to have a trustworthy local expert on-ground, who has years of experience in the field and also owns investment properties in the area himself.
He will be able to distinguish the good, the bad, and the ugly-in an instance. Unless you have resided in the area of interest or travel there regularly, it is very difficult to make a successful investment decision relying solely on online real estate platforms.
Establishing trust and relationships with key people on-ground to be your “eyes and ears” will enable you to have a worry-free, and successful “Out of Sight, Out of Mind” property investment portfolio.
Do you have a story where someone did you dirty in real estate?
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