BiggerPockets Real Estate Podcast

BiggerPockets Podcast 103: Building a Long Distance Real Estate Empire One House at a Time with Elizabeth Colegrove

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Is it possible to invest in real estate at a distance — successfully?

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While many might say “no,” today on the BiggerPockets Podcast we bring you Elizabeth Colegrove, who is working on securing her and her husband’s retirement by investing in one home at a time, largely from a distance. Learn the ins and outs of long distance property management and what to look for when deciding on properties to invest in.

From "house hacking" to 1031 exchanges to long distance investing and more, this show is packed with wisdom (and debates) that are bound to inspire you to move your business forward, no matter where you live and where you invest.

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Sponsor

We just waRealtySharesnted to give a shout out to our podcast sponsor on today’s show: RealtyShares. RealtyShares is a crowdfunding platform that allows you to invest in professionally managed properties without leaving your living room!

Learn more by visiting RealtyShares.com/biggerpockets!

In This Show We Cover:

  • How Elizabeth got started in real estate
    BiggerPockets-Podcast-Cover 300 300
  • How she was introduced to real estate when she was young
  • Discussions about 1031 deals
  • Some tips on getting VA loans
  • Tips for new investors in looking for a property
  • How to successfully use short sales
  • Self managing from a distance
  • What type of properties she buys
  • How she handles costs and how she calculates them
  • Her future real estate goals
  • A perspective on appreciation
  • Plus MUCH more!

Links From the Show:

Books Mentioned in the Show

NOLO Legal Books

Connect with Elizabeth

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investo...
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    Robert Leonard Investor from Lafayette/Baton Rouge, LA
    Replied over 5 years ago
    Not long before the time you recorded the show. The Mortgage Forgiveness Tax Relief Act was extended! http://www.nationalreia.com/national-reia-applauds-house-passage-of-mortgage-forgiveness-debt-relief-act/
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    That’s AWESOME! I didn’t know about that. I totally shared the information on my Facebook page.
    Dick Rosen Property Manager from Gilbert, AZ
    Replied over 5 years ago
    I rarely look at the Show Notes but I just listened to this one yesterday and wanted to say the same thing. You beat me to it Robert 🙂
    Rick Jones from Pennsburg, Pennsylvania
    Replied over 5 years ago
    Hey, interesting show! Have you had trouble using the 1031 exchange process to buy short sales? I can imagine that this would be difficult due to the time constraints of the 1031 exchange and how long a short sale can take.
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Short Sales and 1031 are not symbiotic unfortunately. We ended up buying 2 new builds and a traditional sales since they were most conducive to a 1031. I find that you pay a slight premium for the “new” houses. In my opinion it is still very much worth it because of the tax and depreciation repayment savings. We were also able to work out a discount since we were able to close quickly and bought 2 houses. So it was a close wash, although I still love my short sales 🙂
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Yes, short sales are not great tools to complete a 1031 exchange. In our experience you pay slightly more for a short sales since we had to go with traditional and new builds. While we still got a great price comparatively to their “normal” prices, they were not as great as “pure” short sales. In the end with all the other benefits to a 1031 exchange it still a great tool even with the downfalls.
    Terry Alexander Rental Property Investor from Cloverdale, CA
    Replied over 5 years ago
    @Elizabeth Colegrove great ideas. I like @ Chris Qua, would like know the tools you use to analyze an area. I would like to look at different areas of the county.
    Evelyn Jordan Residential Real Estate Agent from Los Angeles, California
    Replied over 5 years ago
    Great Podcast Elizabeth! I like your energy and passion about real estate and building an investment strategy of your own. Determination and will power are essential for achieving your goals. Staying informed and doing a thorough research on every possible aspect of your investment is key for success. I wish you a lot of success and many more rental properties in the years to come! Evelyn
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Thanks!
    Ryan Jackson Rental Property Investor from Camarillo, CA
    Replied over 5 years ago
    Elizabeth I enjoyed your informative podcast. I am familiar with VA Beach and Lemoore so I could appreciate many of the things you discussed. A few points about VA loans that may help former service members out there that were not mentioned. There is a limit on VA loans, right now the base is around $408k but is adjusted higher for some locations (think Washington DC, Hawaii, San Francisco, etc). After that you move into a jumbo VA. The VA will not guarantee the amount above there limit. The buyer can fund the non-guaranteed amount with a down payment, varies by bank. We bought our first home via a VA loan in 2007. Obviously this was not an ideal time to be a first time homebuyer within the next year. When the rates dropped I refinanced and did not have to pay off the negative equity. This is due to the fact that a VA loan does not require a new assessment to refinance. I actually refinanced a second time to lock in a 2.75% APR for 15 yrs. I was not living in the home at the time. The difference in interest charges more than offsets the lost equity that my renters have paid off.
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Glad it was helpful! They are “very” different areas, but still have so much potential 🙂 Yes the VA loan changes depending on the area, so it is always great to double check based on your specific area. Va loans are able to split, allow you to buy multiple houses as long as you are within the “base”.
    Richard G. Investor from Alexandria, Virginia
    Replied over 5 years ago
    Elizabeth, now sure if I understand the word “split”, please elaborate. I was always under the impression, please correct me, if I use a VA loan and move out after living in the home for 12+ months and then rent out the property that I could not use the VA loan again until I sell the property. Basically I could not have multiple homes with a VA loan? Please advise —
    Richard G. Investor from Alexandria, Virginia
    Replied over 5 years ago
    Interesting and noteworthy comments you make Ryan. I can attest to the VA loan amount limit as I was just pre-approved last week for the max, as you stated, up to 417K and I live in the Washington DC area. But after that the lender said I will require a jumbo loan and they might require more restrictions or requirements on my part. I did not know about the VA loan not requiring a new assessment for refinancing. I always try to look down the road and have considered this cost when doing the numbers ie. I buy this house this year for 300K and then refinance 2-4 years from now so how does the numbers look if I do that? You just subtracted a column for me now – thank you!
    Jonna Weber Real Estate Agent from Boise, ID
    Replied over 5 years ago
    Great job Elizabeth – and I appreciate the buy and hold perspective! It sounds like the route you are going is perfect for the circumstances you are in (military). Thank you for sharing your story!
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Thank you!
    Jay
    Replied over 5 years ago
    Not a great podcast. : ( she says 93% of her strategy we cannot use. So whats the point? And also her monthly cashlflows sound like peanuts. Just being honest , Regards, Jay Baltimore landlord
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Sorry it wasn’t one of your favorite podcast, jay! I do appreciate you listening to it and taking the time to provide feedback. I actually grew up outside Baltimore . Small world 😉 Elizabeth
    Brett C. Rental Property Investor from NH
    Replied over 5 years ago
    “This is not a debate” is THE tweetable topic of 2015, calling it right now and the year isn’t a week old 🙂
    John
    Replied over 5 years ago
    Didn’t really get much from this podcast. I just didn’t like the speakers strategy, nor her attitude. She seems to act like a know it all because like she says consistently, she has an “MBA”. Hopefully this comment does not get taken personal because “This is not a debate”.
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    John, thank you for the constructive criticism! I emphasized my MBA to signify the fact that I wasn’t a lawyer and only had theoretical background in the numbers. I will have to work on my wording, as the last thing I want to come across is a “Know it all”. Honestly my motto is a “always learning landlord” as I seem to learn something new all the time! Thanks! Elizabeth
    Richard G. Investor from Alexandria, Virginia
    Replied over 5 years ago
    I actually like the fact of Elizabeth stating MBA and I am surprised Brandon or Josh did not dig deeper into that like they always do. I was waiting for the question to see how that course of study has helped you in your business. Usually the question goes like this: Brandon- So Elizabeth, tell us about your MBA and do you recommend newbie investors to start that way? For the past week I personally have looked at a variety of Masters programs in America (and even outside of the Country) that focus on Personal Finance in Real Estate. I forgot which podcast was that but I feel that can be instrumental in any business. Knowing more about finances and understanding the numbers is key. Thank you Elizabeth for sharing just wish you would have talked more about it and how exactly it has helped you. Your profile touched on it a little bit too.
    Chris Qua Residential Real Estate Broker from Los Angeles, California
    Replied over 5 years ago
    I like your strategy Elizabeth! What resources do you use to analyze an area? Like employers, population transience, etc? Thanks again!
    Edwin Duran from Orlando Florida, Florida
    Replied over 5 years ago
    A bit unclear, so who pays the tax on the price difference on a short sale ? Buyer or seller?
    Rick Jones from Pennsburg, Pennsylvania
    Replied over 5 years ago
    @Edwin Duran Seller pays taxes. Well, “would” pay taxes but the Morgage Forgiveness Tax Releif Act as mentioned above waives any tax burden for the seller. So technically nobody pays tax on the difference untill said act expires.
    Brian Ky from Saint Petersburg, Florida
    Replied over 5 years ago
    I have also been collecting real estate as the government moves me around. One benefit is you won’t have everything in one market if that area collapses. Purchasing property near military installations is a great stratedgy like buying near a college. The constant flow of potential renters is there. Now for the down side of the military installation stratedgy. Unlike colleges, military installations do go away. If you follow this strategy, stay on top of the Base Realignment And Closure Committee (BRAC). When the BRAC is updated your investment could be in trouble waters. If it looks like the military installation might close, I would personally be calling a realtor as the largest employer for that area is closing their doors.
    Tereal Wilsonn Rental Property Investor from Oak Park, Michigan
    Replied almost 5 years ago
    Just wanted to add, that the VA funding Fee is waived for any veteran currently more then 10% disabled
    David Pierce from Tacoma, Washington
    Replied over 4 years ago
    Was excited to hear about the VA loan more in depth and was pretty disappointed by the relative lack of knowledge in the subject. I actually was having some of my military buddies listen to the show and I doubt I will ever get them back to the podcast after this. Seemed to use a pretty wreckless strategy and not have a lot to offer in way of assistance to others in the community – which is rare for this podcast. No offense to Liz, but just didn’t seem relevant for the average person nor informative to those of us who are serving.
    Elizabeth Colegrove from Hanford, California
    Replied over 4 years ago
    David, Thank you for your honest feed back. I am sorry that it wasn’t helpful for you and your buddies. This strategy while it might seem slightly reclusive is very well planned and thought out just like a tactical strike. If I can answer any questions please feel free to pm me. I know you mentioned the VA loan. While I didn’t have a chance to discuss it in depth at the time, I did put together a VA loan guide. Hope this helps.https://www.biggerpockets.com/renewsblog/2015/12/01/va-loan-real-estate/ Good Luck on your real estate journey!
    David Pierce from Tacoma, Washington
    Replied over 4 years ago
    Thanks Liz, I may check that out
    Brett Coryell Rental Property Investor from Lafayette, IN
    Replied about 4 years ago
    I’m working my way through the podcasts, picking and choosing the ones that look interesting. After 40 or 50 of them, I’m learning a lot and I’m grateful for that. The way Josh treated Elizabeth during this show, especially during the “This is not a debate” segment was disrespectful. She tried to explain why she was taking certain types of risks and that her approach wasn’t suitable for everyone but Josh just kept talking over her. She tried to explain that she has an MBA and is a numbers person in a different part of the podcast but Josh was pretty quick to discount that or ignore it entirely. That “Bro” attitude towards women doesn’t sit well with me. Elizabeth handled the situation with grace but she deserves an apology.
    William C. Real Estate Agent from Souderton, PA
    Replied over 3 years ago
    I couldn’t disagree more with you. He was trying to make a point for the listeners. If she would have slowed down and listed to him there wouldn’t have been the contentious debate there was. Iv listened to about 200 podcasts and this is the first one I had to turn off because I couldn’t listen any longer.
    Cameron Davis Investor from Austin, TX
    Replied almost 3 years ago
    I believe that Elizabeth’s property acquisition, as she stated on the podcast, is a very risky one. And I feel that’s what Josh was trying to make clear to the listeners. The basic strategy of buying a property with a VA loan, then moving and buying with a new VA loan is a great idea. But she explains that she is leveraging as much as possible, and has relatively thin profit margins (by ignoring property management fees, repairs, vacancy). This all works… until something happens to the economy, or housing, or ??? Sure, as long as they both keep working “day jobs” and are keeping A LOT of money in savings, they should be fine. But with her “not my problem” attitude, I can only assume that she would just walk away from a property if she was underwater.
    Don Spafford Investor from Idaho Falls, ID
    Replied almost 3 years ago
    I would have liked to know how Elizabeth self-manages from a distance when there is a vacancy. Do you just contact a realtor to handle getting it rented? Ad have that person on hand before you move so that they have a key? Then just pay them whatever they charge to place a tenant? And maybe have them tell you what repairs are needed after somebody moves out?