How to invest in rentals when strapped for time?

[Sean Osch]

Hey everyone,

I'm new to investing in real estate. I'd like to purchase a rental in the Knoxville TN area, but I don't have spare time to maintain the property myself. How would you recommend identifying and investing in my first rental? Should I work with an organization, a local agent, or do something else? Again, I don't have a large amount of time to spend managing the investment (or searching for it), but I can do some analysis to ensure it appears to be a good investment in terms of area, yield, etc. 

Thanks!

Sean

[Chris Seveney]

i would do none of the above. If you do not have the time, I recommend holding off on investing.

[Matt Castle]

Find an agent who specializes in investment properties, run your own investment analysis, then decide if the numbers make sense for your circumstances. 

If you can't/won't manage it yourself, hire a local property management firm to take care of your assets for you, but don't be a hands off owner. Call your PM once a quarter, at minimum, ask what you can do to them help, ask for visits to the property once a year (at minimum), etc. 

If you're in town, make random drive by visits to see if everything looks good from the street. Ask to see it yourself but schedule it ahead of time. 

Just b/c you're hands off 99% of the time, doesn't mean you should stay hands off all the time. Put in the work. Nothing passive about real estate, no matter what the gurus or influencers will tell you. 

[Eliott Elias]

Find the deal: realtor 

Find a tenant: realtor 

Manage tenant: property manager 

[Theresa Harris]

Find a local property manager after you've found a property. you might be able to work with them to find a property, but you need to go and look at it.

[Dave Poeppelmeier]

If you don't have time to dedicate to being an Investor, I would recommend passively investing in a REIT, Syndication, etc.

Yes, a Realtor can help you find a property, but you have to educate yourself on the area, prices, rents, etc. If you can find a Realtor that's willing to spoon-feed you investment properties, that's great. You also need a property manager of course, which I'm sure there are plenty to choose from in the Knoxville area. But overall, if you're going to invest in properties yourself, you can't treat it as a hobby. Good investors know their market like the back of their hand, and that takes time and dedication on the front end. Once you figure out what your criteria are, the areas you want to look in (actually seeing properties if you're local), etc, then you can put things on auto-pilot and know if a property is worth checking out or passing on based on some basic information in a listing. 

But, you're in the right place here on BP to start figuring all of this out. Best of luck!

[Nathan Gesner]

Quote from @Sean Osch:

Welcome to the BiggerPockets forums!

I would hire a REALTOR to help you find the properties and a property manager to manage them.

[Jaron Walling]

Like others mentioned above your post leads everyone to believe you're aiming for truly passive investments. Rental properties are NOT passive. Even if you operate through a PM you still have to answer emails, phone calls, and make business decisions for repairing properties. There are key questions to ask a PM company before hiring them. None of this is not rocket science but without some baby steps (self managing for example) you'll be clueless.

I suppose you could go turn key... but do your research. Dig through the forums to draw your own conclusions about the strategy.

[Bob Stevens]

Simple, connect with those that provide rentals 100% hands off, allow them to handle it , 

Good Luck 

[Melanie Thomas]

Mimicking others above, find a Realtor who specializes in working with investors. Then visit the NARPM website to find an excellent PM company in your area. Good luck and happy investing!

[Drew Sygit]

@Sean Osch

Why does everyone want to start with an agent, when 95% of agents really only know how to work with owner-occupied properties?

Don't believe us? Ask agents what the Cap Rate, ROI or Cash-on-Cash is on a property they recommend you buy!

You should be building a team to maximize your probability of success!

While building your team, it's important you understand the motivations of everyone on your team.

Property Management Company (PMC): No one else on your team should be as vested in a long-term relationship with you as a PMC. They will have to manage whatever you buy on a daily basis until you sell the property or terminate them. You need to find a good one though, that is honest & competent. An honest PMC's incompetency will still cost you.

Sourcing: whether agent, wholesaler, flipper, etc. many only have a vested interest in a transaction. You want to find ones that are vested in developing a long-term business relationship with you. Otherwise, they will screw you for their own compensation.

Inspector: You want an unbiased and competent professional that will properly do their job and document it.

Contractor: Finding contractors that don't cut corners and overcharge is EXTREMELY difficult. Even if they are referred, you really don't know until AFTER they've done a job. The other 3 above should be able to provide referrals, but don't blindly trust anyone!

[Jaron Walling]

I agree with @Drew Sygit. I didn't contact any agents until I was confident in my numbers and market research aka driving around, bicycling around, and window shopping :-)

[Jim Pfeifer]

If you don't have time, I think buying a rental property could become a problem for you. In my experience, turnkey properties are not passive - regardless of what the turnkey companies say. You will need to do all of the upfront work of finding a market, turnkey company and then a property. Then you will need to get a loan, purchase the property and manage the property manager. I was a SFH turnkey investor and thought I was a passive investor. I was not. I struggled finding quality property managers and my properties never cash flowed as expected. Owning rental properties are active investments.

I sold all of my active properties and became a passive investor in real estate syndications.  The active part comes up front when you vet a sponsors, analyze a market and analyze the deal.  After you wire your money, you have no control and no responsibilities.  You effectively hire an asset manager and they manage the property for you - the only thing you do after the wire is receive reports and distributions (hopefully!).  It's quite a bit of work upfront - no different than finding a turnkey operator, a market, a property and a property manager, but you are truly passive on the back end, which is not at all true when you are owning a rental property.  The biggest challenge is finding quality operators - and the best way to overcome that hurdle is to be part of a Community.  There, you can learn how to become an effective passive investor, get recommendations for quality operators, asset classes and markets and work with other like-minded people who are pursuing the same goals you are.

Good luck!

[Sean Osch]

Thanks everyone for the advice! It sounds like I still have some thinking to do in terms of my level of commitment, but once I identify a property then I would need an agent and a property manager who are trustworthy and capable. 

[Patricia Berman]

This might be a place where you find properties that are managed by a property manager or buy one with the intention of placing a property manager.  Also, you might invest in a Real Estate Fund type of thing like Fundrise.  I did that for a bit and the returns were pretty good.  Certain investments like Syndications or smaller group investments than syndications might work for you.  Usually, with syndications you have to be accredited and have experience so you should definitely start somewhere but those are a couple of options. 

Good luck!

Patricia

[Trent Rogers]

Instead of jumping to a REIT or syndication, you could consider some sort of joint venture. If you have capital, credit, etc. maybe there is an opportunity to partner with someone who has more time or knowledge.

[Paul Moore]

Hi @Sean Osch! I agree with @Chris Seveney above. I'm in my third decade as a real estate investor and I've noticed that people who have a full time career or retirement, typically don't multitask into real estate very well. It's not as easy as it looks on HGTV and you probably have friends who are doing it, I would bet they are either doing it full time or they are not enjoying the ROI and quality of life you would like to have. I highly recommend that you set your sights on passive investing while you are strapped for time. If and when you can quit your J-O-B, then I recommend considering active investments in real estate.

Until then your options include NNN leases which are somewhat passive. That could include lending money to house flippers. That could include investing in a syndication or fund. Many options for passive investors and if you choose your operator/manager well I would predict you will make more money and have far more free time in your life. Good luck and happy investing!

[Brock Mogensen]

Investing in a syndication as an LP could be a good option.  It is a truly passive way of investing.  You won't have active control of the deal, but it allows you to focus on your main source of income all while participating in all of the benefits real estate has to offer.

[James Wise]

Quote from @Sean Osch:

Hey everyone,

I'm new to investing in real estate. I'd like to purchase a rental in the Knoxville TN area, but I don't have spare time to maintain the property myself. How would you recommend identifying and investing in my first rental? Should I work with an organization, a local agent, or do something else? Again, I don't have a large amount of time to spend managing the investment (or searching for it), but I can do some analysis to ensure it appears to be a good investment in terms of area, yield, etc. 

Thanks!

Sean

 Get yourself a Realtor that works for a property management company. Done.

[Drew Sygit]

Invest in a syndication