Interview With a Bi-Coastal Investor: Why I Purchased My First Multifamily Property Thousands of Miles Away
If you read enough real estate investing websites, forums and books, you’ve probably come across a handful of repeated advice:
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Find a good mentor. Know your market. Don’t become paralyzed by too much education.
And invest locally at first. Stay in your own backyard until you have experience under your belt.
Today, however, we sit down with an investor who hasn’t heeded this advice — and who has found success by expanding his real estate portfolio to include properties on both coasts. Buy and hold investor Jon Huber calls himself a "bi-coastal techie who spends his free time researching properties, scouting locations, and shooting hoops." Hailing from Los Angeles, he primarily invests in South Florida, where he recently purchased his first multifamily property.
How does he manage effectively from several thousand miles away? Would he recommend bi-coastal investing to others? Where does he plan on taking his business from here?
Read on to delve into Jon’s insight on remotely managing properties, starting out in multifamily investing, and his future real estate plans. And if you have questions we haven’t covered, be sure to leave them in the comments section below!
A Conversation With Bi-Coastal Investor Jon Huber
Jon has always been fascinated by passive income and intrigued by the idea of using money to make money. Coming from what he dubs "a real estate family," he says that his mother being a top real estate agent, his father working in construction, and several of his sisters and their husbands having careers as agents piqued his interest in the industry from an early age. He got his real estate license back in 2004 and actively sold for 3 years.
“I got out when the market crashed because I was a 25 year old kid and didn’t have the clientele to weather the storm,” he explains. “I used my degree and got into the tech world, and saved enough to get back into real estate… as a buyer, not a seller.”
I ask Jon about his recent purchase — a triplex he found near Palm Beach Gardens, FL when he traveled there to close on a single family property. He originally tried to call the listing agent for the property (which was slightly overpriced), but they didn’t answer.
“I drove by and saw a FSBO sign with the seller’s number, and was able to negotiate directly with the seller,” he explains.
“I negotiated down to less than 80% of asking price. The rents are about 80% of market value, so the deal really appealed to me. I offered a 30 day close, and settled on the property last week.”
His negotiating tactic? Upon walkthrough, he took note of the condition of the property, then took out the buy and hold spreadsheet he’d prepared (with some trusty BP Calculator numbers!) and showed the seller why they hadn’t been getting the activity they’d hoped for. (You can read all the details in Jon’s Forum post here.)
Now, he plans on bringing the rents up to market, as well as improving the building and the systems surrounding its management.
“The previous owner had a lot of different vendors working on various aspects of the house,” he explains. “They had vendors for pest control, water softener, irrigation, lawn care, handyman, and not to mention a lot of deferred maintenance. I plan on consolidating the vendors, and getting the units up to par sooner rather than later.”
Managing From Afar
Sounds like a solid strategy… but how does he plan on implementing all of this from across the country? It’s all in the quality of your property management, he explains.
“I will be using my property management team,” he says. “They are organized, aggressive, and have been on top of everything from day one. This is key because I am in California, and they are in Florida. It would be tough to unclog toilets from 2,500 miles away.”
Despite the distance, so far his experience owning his latest property has been positive. If there’s one thing he’s learned from expanding into the multifamily space, he says, it’s that it’s just as easy to find great deals, to analyze cash flow, and to close on properties as it is for single family home purchases.
He explains, “Now, the tenants in a single family may be different than a multifamily. Single family tenants tend to take more pride in their homes and the turnover might be less, however, from an acquisition standpoint, it is just as simple.”
Overall, long distance landlording is something he would recommend to other investors… with a few caveats, such as understanding the importance of knowing the markets you invest in — even if those markets are thousands of miles away. He explains his philosophy to me:
“Yes, I live in Los Angeles, and invest primarily in South Florida. I know that my strengths are in analysis and negotiations, not in handy work and 1099 preparations. Property management is the only way to go for me, and that is not as a result of the distance. I already have a full time director position, and I feel that I would be burned out managing my properties even if I lived close. Quality of life at 10% of rent collected sounds good to me.”
He adds, "I think long distance investing is fine as long as you are comfortable with the area. I know the real estate markets of Los Angeles, NJ, and South Florida very well and would be comfortable investing in any of them. People suggest to rent in your own backyard at first, but if you are comfortable out of state, have a property manager who is aggressive, and the returns are there… why wouldn't anyone pull the trigger?"
Entering the Multifamily Space
So how has he reached this point? There are lots of investors out there who’d like to expand into multifamily investing, but may find the proposition intimidating or wonder where to start. Education is key, Jon says, especially education that involves interactive learning with likeminded individuals looking to reach similar goals.
“My real estate education began as a toddler going to open houses,” he explains. “I believe that there are people that know all the ins and outs of real estate and have read all of the books, but still can’t make the first purchase out of fear. By attending the meetups, you surround yourself with those doing exactly what you want to do, or even with newbies that want to do what you do. When you are completely surrounded by success, success becomes more of a commonality. When your mindset changes, and your attitude on success becomes more of an attainable goal, rather than an unreachable wish.”
BiggerPockets, he adds, has been helpful in introducing him to fellow investors and rounding out his real estate education, especially through the BP Podcast. He cites the feeling of camaraderie amongst the members as a major reason he frequents the site.
“The fact that Josh and Brandon are still there greeting newbies and answering questions is amazing,” he says, and adds, “It’s a beautiful thing to see multimillionaires reaching out to someone to help analyze their first deal for the goodness of the community.”
So with a growing portfolio of properties on both coasts, where does Jon plan to take his real estate business from here? While his initial plan was to retire early, today he’s not quite sure he’ll ever retire — he loves working in real estate too much. He may quit his day job one day, he says, although he is currently enjoying the steady income that he uses to buy more properties. His long term dream?
“I want to eventually get to the level where I can travel world, and collect my rents from a beach at an undisclosed location.”
To conclude our conversation, I ask him the most important question of our interview, which is: You have to get a tattoo of a famous quote. What does it say?
“Two of my favorites are ‘Power without wisdom is tyranny, wisdom without power is pointless’ and ‘The safest ship is the one docked in the harbor, but that’s not what ships were made for,’ he answers. “But those would NOT be cool tattoos. It would have to be: ‘Aquila non capit muscas.’ It’s a Latin proverb that translates to: ‘An eagles doesn’t catch flies.’ Just a reminder not to deal with insignificant issues.”
Now, there’s a quote that can be applied to real estate investing.
Investors: Have any questions or comments about Jon’s bi-coastal real estate endeavors?
Be sure to leave a comment below, and let’s chat!