Long Distance Investing -- How to Invest in Boise from Uganda

I am a little envious when I see Bigger Pockets members say they will walk over to look at a property in their neighborhood or maybe drive a few hours to check out a new town with lots of investment potential. This is because I am the ultimate long distance property investor. Instead of an out of state investor, I am an out of country investor. I have not lived in the United States since 2004 with stints in the Middle East, East Africa, Caribbean and South Pacific. It is great living overseas, but if a problem emerges with one of your properties it is not so easy to drive over and fix it. Finding new properties to buy is also a challenge. You are not able to walk the neighborhood see if the house happens to be adjacent to high retention power wires or is located next door to the club house of a motorcycle gang. At least not until Zillow develops a nifty "dodgey neighborhood" feature.

I have found successful long distance investing requires having a talented and trustworthy team on the ground that has your best interests at heart. The key members of this team include:

1) The Right Real Estate Agent: A reliable real estate agent who emphasizes all of the cons with a property before the pros. This person should be able to provide you with a general estimate of the cost of necessary repairs and any deferred maintenance. This person also needs to be able to shoot good quality videos with sound from inside and outside of the house to help you capture issues like road noise or the neighbor's loud barking dogs. This person needs to truly know your specific niche as an investor as it saves both of you time. In my experience if this person is not also talking you out of buying certain properties they may not be the right person for the job.

2) The Right Property Manager: I have had to fire a few property managers who were more focused on their fees than my property. But, a motivated and engaged property manager who is looking out for your interests is worth their weight in gold. I have also found that the closer the property manager's office is located to your investment properties, the better. I had one property manager located far across town and this person never showed my property to tenants and I missed out on thousands of dollars in rent. The right property manager also has the names of skilled contractors who are responsive and will do high quality work for a fair price. Without the right property manger it would be nearly impossible to fix a toilet in Boise from Uganda or negotiate with a problem tenant in Denver from Fiji. Even under less extreme situations the right property manger will save you time, money, and headaches.

It is worth pointing out that personalities are different so a property manager that works well for one investor may not be the right fit for another. The key is finding a property manager that fits your personality and investment goals. I find the best way is to schedule interviews with multiple property managers and find one that fits your needs and personality. Bigger Pockets also has great lists of questions to ask a prospective property manager. If you find that you made the wrong choice in selecting a property manager, don't waste time in ending the relationship as soon as practicable. A bad fit rarely improves over time.

3) The Right Lender: Working with lenders from overseas poses many unique challenges. The situation does not fit the traditional mold and it seems to confuse many of the traditional bankers. I have found local credit unions to be far better than traditional banks for investing from afar. If your lender is not highly responsive to emails, find a different lender, because it will be next to impossible to try to close on time with them from overseas. It can be difficult to arrange for a cashier's check from abroad or to conduct large wire transfers. I find it is best to get the cashier's check to the title agent as soon as you put a contract on a property. If the deal falls through the title agent can hold the funds for the next property you buy. Alternatively, you can have a reliable member of your local team hold your cashier's check and provide it to the title agent nearer to closing. Electronic signatures have made putting in an offer or counter offer far easier, but closings still required signed and notarized originals. The U.S. Embassy in foreign countries offer notary services on certain days. Keep in mind that closing documents can take four days to arrive by FedEx or DHL from overseas and you do not have the ability to make last minute corrections at the closing because you are not physically present. A limited power of attorney held by a member of your trusted team can help to overcome some of these last minute issues.

Start building your own reliable local team and have the freedom to be a long distance real estate investor whether it is from Chicago to Detroit or from Congo to Cleveland.

Nathan Carter

*The above article is neither tax advice nor legal advice (because I skipped the bar exam and moved to Lebanon). Please consult an attorney or a tax professional for any related questions.