How To Find Real Estate Deals When Long-Distance Investing

In this article

Imagine receiving a $20,000 check to purchase a rental property. How about step-by-step guidance from some of the most experienced real estate investors in the industry? Well, that’s exactly what the Dream Investment Adventure Series is all about.

Follow along with our contest winner, Joe, and his journey of purchasing an out-of-state rental property. Through the mentorship of Steve Rozenberg, Head of Investor Education for Mynd Property Management, they learn about investing remotely. Throughout the next two months, the pair will research markets, build a team, purchase a property, complete a renovation, lease the property, and everything in between without Joe ever seeing the property in-person.

So far in the Dream Investment Adventure Series, we have covered goal setting and identifying investment criteria. Next, we helped Joe to define his rental market. Most recently, Joe found his local investment team in Atlanta, including a realtor and property management company. Let’s dive into week 4 to analyze potential deals!

Investing in Out-of-State Property

Last week, Joe was tasked to find good real estate deals to analyze in the Atlanta area. Potential properties must fit the criteria Joe defined earlier in the process. Setting clear, non-negotiables removes the temptation to select a property based on feelings.

Related: Looking to Invest Out of State? Here’s How to Pick and Analyze a City

Furthermore, it forces you to make decisions based on numbers. Nick Fitzpatrick, Joe’s real estate agent, joins Steve in today’s episode to discuss how they worked remotely to look at properties.

Inspections Help You Avoid Bad Deals

Technology is your friend when doing a deal remotely. Joe accompanied Nick to look at some properties via FaceTime. They experienced a rough start and had to drop out of a couple of contracts. Due diligence revealed the homes needed too many expensive repairs for the numbers to work.

Sometimes deals fall through, but that is a normal part of the remote investing process. A mold issue in one property could have cost Joe $6,000 down the road.

It can be frustrating to see a deal fall through, but stay positive. As an investor, larger issues can be avoided through inspections and support from a local team. Keep in mind, future issues could have a large effect on a deal’s profitability. Every win and loss is an opportunity to learn lessons and become a smarter real estate investor.

Related: How to Hire Amazing Team Members for Every Real Estate Process—From Finding Deals to Renting Them Out

What If You Can’t Find an Investment Deal in Your Target Area?

If issues arise when looking for investment properties that fit your criteria, either change your parameters or widen the search area. Joe ultimately expanded his search area to include Lithia Springs, which is located about 20 minutes west of downtown Atlanta.

Joe and Nick found a property in Lithia Springs to analyze. What initially looked like a turnkey property ultimately was the BRRRR deal he had been searching for.

Analyzing a Deal Using the BiggerPockets BRRRR Calculator

The BiggerPockets BRRRR Calculator was created to simplify the process of analyzing returns on potential fixer-upper properties. You can estimate the potential cash flow and evaluate the profitability of a property. This also works for remote investors looking to invest out of state.

Here’s how Joe used the BiggerPockets BRRRR calculator to analyze the deal to determine if it fits with his goals and strategy.

• Original Listing Price: $134,900
• Offered: $110,000
• Purchase Price: $114,000
• Estimated ARV (After Repair Value): $180,000

The property was originally listed at $134,900, and the seller was highly motivated. Frustrated with several contracts that fell through, they were about to pull it off the market.

After discovering the home needed some work, Joe offered $110,000. The seller returned with an offer of $114,000 which Joe accepted. As a cash deal, there are minimal closing costs involved, so they estimated that at around $1,200.

In six months, Joe should be able to refinance the home and pull out most—if not all—of the money he invested.

Related: Rental Property Numbers So Easy You Can Calculate Them on a Napkin (With Real-Life Example!)

What to Consider When Making an Offer

The Seller’s Motivation

• If sellers are or are not highly motivated
• Whether the home has previously been under contract several times
• Whether or not previous deals fell through
• The seller’s potential frustrations or emotional state

Repairs Needed

• The home needed extensive repairs to be rent-ready
• Sellers often prefer to drop the price vs. fix the property before a sale

These factors gave Nick and Joe more room for negotiation on price.

Technology combined with an expert team on the ground allows you to complete the purchase process remotely without sacrificing due diligence.

Related: The Simple 6-Step Process for Estimating Rehab Costs

Rehab Plan and Costs

Planned renovations at Lithia Springs investment property are as follows:

•  New roof
•  New siding
•  Changing countertops
•  Fixing toilet leak
•  Adding fourth bedroom in the basement

Pro Tip: Add value by converting a space into an additional bedroom to increase rent and home value

Using the Expertise of Your Team

When investing remotely, your team acts as your eyes and ears on the ground. Each member contributes their advice, experience, and analytical skills, and you use that data to evaluate the deal.

Now that you have invested the time and research to build your dream team in a market, the next deal is easier. Simply repeat the process for a second property using the same team you have established a relationship with.

 Homework Week #4

Joe’s homework is to do due diligence on the property and close the deal. He will also begin building a list of contractors for the rehab. Tune in next week to learn exactly how to handle due diligence and what it takes to close real estate investment deals remotely.

To find out more about Joe’s investing journey, gain access to investor tools and resources, and help your own remote investment journey, check out the exclusive destination page for BiggerPockets fans only. You’ll also find a limited-time BiggerPockets exclusive offer for property management!

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.