Long Distance Investing + Seller Financing
Member since 2022 · 45 posts · 5 votes
Long Distance Investing + Seller Financing
Most Popular Reply
Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes
3yQuote from @Antonio Chelala:
Hello all,
I hope you are doing well.
I am currently looking to purchase my first investment property in the next few months.
However, I am currently hesitating if purchasing a property I have never seen is a good idea for my first investment property. I am looking to ask the possibility of having seller financing as well.
What is your opinion on investing in a property you never see and using seller financing for a first timer? What if I see it once before I buy it, is that risky for a first time buyer?
Thanks all :)
Best,
Antonio
Having a good solid team in place is the fundamental need of anyone who investing out of state. Whether sight-unseen or not.
I would always recommend having some sort of avenue to see the property, or have it seen in person by someone you can trust.
OOS investors I work with, I will typically meet their GCs or PMs at the property and walk it together while doing a live video with my investor. That way all opinions are aired at once, the GC's getting his number, the PM is figuring out the neighborhood and renters in the area, and whether it'll be a good rental. For Flips, I typically meet GCs only out there, and do the same process.
Build a team you can trust, maybe look in markets that you also have friends and/or family that you would trust to go be eyes and ears for you every once in awhile. You can also network with agents, other investors, and generally anyone you could build enough trust in to take their word on viewing properties for you. Just a method to get eyes down there.
Alternatively, I work with a plethora of In state and OOS investors who both buy sight-unseen; they typically have additional capital in reserves, and usually have a great relationship with whoever their agent is.
Both strategies work, but like Nathan mentioned, you have to identify the additional risk you are exposed to, as well as your experience level and understanding.
* No matter what you do, Build A Solid Team. *
Hope this helps, always looking to connect and chat further if you are interested,
Cheers!
17 Replies
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Antonio Chelala:
Yes, it adds risk. However, investors do this all the time. It really depends on your personal skills and the honesty/skills of those working for you.
If you have a knowledgeable agent, they can walk the property and shoot a video tour with you. They'll be honest about the market, the neighborhood, and the property. Then you can send a home inspector or contractor to cross-check the structure.
I wouldn't recommend it for a beginner, but it is possible. You just have to accept the additional risk.
The DIY Landlord Book4.7248 Reviews - Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Make sure the condition is known (have someone walk the property) and the terms are good.
- Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes3y
Quote from @Antonio Chelala:
Hello all,
I hope you are doing well.
I am currently looking to purchase my first investment property in the next few months.
However, I am currently hesitating if purchasing a property I have never seen is a good idea for my first investment property. I am looking to ask the possibility of having seller financing as well.
What is your opinion on investing in a property you never see and using seller financing for a first timer? What if I see it once before I buy it, is that risky for a first time buyer?
Thanks all :)
Best,
Antonio
Having a good solid team in place is the fundamental need of anyone who investing out of state. Whether sight-unseen or not.
I would always recommend having some sort of avenue to see the property, or have it seen in person by someone you can trust.
OOS investors I work with, I will typically meet their GCs or PMs at the property and walk it together while doing a live video with my investor. That way all opinions are aired at once, the GC's getting his number, the PM is figuring out the neighborhood and renters in the area, and whether it'll be a good rental. For Flips, I typically meet GCs only out there, and do the same process.
Build a team you can trust, maybe look in markets that you also have friends and/or family that you would trust to go be eyes and ears for you every once in awhile. You can also network with agents, other investors, and generally anyone you could build enough trust in to take their word on viewing properties for you. Just a method to get eyes down there.
Alternatively, I work with a plethora of In state and OOS investors who both buy sight-unseen; they typically have additional capital in reserves, and usually have a great relationship with whoever their agent is.
Both strategies work, but like Nathan mentioned, you have to identify the additional risk you are exposed to, as well as your experience level and understanding.
* No matter what you do, Build A Solid Team. *
Hope this helps, always looking to connect and chat further if you are interested,
Cheers!
- Accountant · 100% Remote · Member since 2019 · 495 posts · 216 votes3y
Hi, @Antonio Chelala! My first investment property was bought from a distance and every property I've purchased since then has been purchased from a distance. The key is to have the necessary "team members" in place that are local to where you are buying. They will be instrumental in your due diligence process.
There is absolutely added risk when purchasing from a distance. "Long Distance Real Estate Investing" by David Greene is an excellent resource for this.
On the creative finance front, there are more deals available now than before with sellers willing to offer seller finance or subto. We actually just secured another duplex with seller finance.
You will typically need to go direct to seller to be able to pull this off. Not always, but typically.
- Real Estate Agent · Fayetteville, NC · Member since 2022 · 213 posts · 293 votes3y
This ^
- Member since 2022 · 45 posts · 5 votes3y
Quote from @Nathan Gesner:
Quote from @Antonio Chelala:
Yes, it adds risk. However, investors do this all the time. It really depends on your personal skills and the honesty/skills of those working for you.
If you have a knowledgeable agent, they can walk the property and shoot a video tour with you. They'll be honest about the market, the neighborhood, and the property. Then you can send a home inspector or contractor to cross-check the structure.
I wouldn't recommend it for a beginner, but it is possible. You just have to accept the additional risk.
Yes that makes sense Nathan, thank you :)
- Member since 2022 · 45 posts · 5 votes3y
Quote from @Jared Trindade:
Quote from @Antonio Chelala:
Hello all,
I hope you are doing well.
I am currently looking to purchase my first investment property in the next few months.
However, I am currently hesitating if purchasing a property I have never seen is a good idea for my first investment property. I am looking to ask the possibility of having seller financing as well.
What is your opinion on investing in a property you never see and using seller financing for a first timer? What if I see it once before I buy it, is that risky for a first time buyer?
Thanks all :)
Best,
Antonio
Having a good solid team in place is the fundamental need of anyone who investing out of state. Whether sight-unseen or not.
I would always recommend having some sort of avenue to see the property, or have it seen in person by someone you can trust.
OOS investors I work with, I will typically meet their GCs or PMs at the property and walk it together while doing a live video with my investor. That way all opinions are aired at once, the GC's getting his number, the PM is figuring out the neighborhood and renters in the area, and whether it'll be a good rental. For Flips, I typically meet GCs only out there, and do the same process.
Build a team you can trust, maybe look in markets that you also have friends and/or family that you would trust to go be eyes and ears for you every once in awhile. You can also network with agents, other investors, and generally anyone you could build enough trust in to take their word on viewing properties for you. Just a method to get eyes down there.
Alternatively, I work with a plethora of In state and OOS investors who both buy sight-unseen; they typically have additional capital in reserves, and usually have a great relationship with whoever their agent is.
Both strategies work, but like Nathan mentioned, you have to identify the additional risk you are exposed to, as well as your experience level and understanding.
* No matter what you do, Build A Solid Team. *
Hope this helps, always looking to connect and chat further if you are interested,
Cheers!
Definitely, and thank you for this recommendation. A good question to you is how would you know if the GC,PM etc... you are talking to are knowledgeable, and how do you build a relationship with those people and make them a team?Would love to chat more...!
- Member since 2022 · 45 posts · 5 votes3y
Quote from @Max Emory:
Hi, @Antonio Chelala! My first investment property was bought from a distance and every property I've purchased since then has been purchased from a distance. The key is to have the necessary "team members" in place that are local to where you are buying. They will be instrumental in your due diligence process.
There is absolutely added risk when purchasing from a distance. "Long Distance Real Estate Investing" by David Greene is an excellent resource for this.
On the creative finance front, there are more deals available now than before with sellers willing to offer seller finance or subto. We actually just secured another duplex with seller finance.
You will typically need to go direct to seller to be able to pull this off. Not always, but typically.
That makes sense, thanks Max for the recommendations! Would you have by any chance any seller financing agreement template you would be open to share?
Also, if you were to do seller financing and then you want to do a cash-out-refinance, and use a bank, how do you set terms with the seller of paying off the mortgage early? Can you avoid remaining interest fees?
Thanks!
- Accountant · 100% Remote · Member since 2019 · 495 posts · 216 votes3y
@Antonio Chelala, I don't have a seller financing template contract but I'm sure some of the courses/programs that are out there have one. Contracts to purchase real estate will be state-specific.
For the duplex we just secured with seller financing, I found a template offer to purchase contract online specific to the state and made sure it contained everything I'm used to seeing in a purchase contract. Then, I added addendums as applicable and a promissory note. Then, had our law firm add anything else that was needed.
You can write into the contract that there will be no penalties for paying off the note in full early. That's the beauty of creative finance. Everything is up to you and the other party in the transaction. You have a lot more control over the terms of the agreement.
- Member since 2022 · 45 posts · 5 votes3y
Quote from @Max Emory:
@Antonio Chelala, I don't have a seller financing template contract but I'm sure some of the courses/programs that are out there have one. Contracts to purchase real estate will be state-specific.
For the duplex we just secured with seller financing, I found a template offer to purchase contract online specific to the state and made sure it contained everything I'm used to seeing in a purchase contract. Then, I added addendums as applicable and a promissory note. Then, had our law firm add anything else that was needed.
You can write into the contract that there will be no penalties for paying off the note in full early. That's the beauty of creative finance. Everything is up to you and the other party in the transaction. You have a lot more control over the terms of the agreement.
Makes sense, thanks for the information! On average how much do you pay for lawyers to look over the contract, do they help fill out necessary things, in case you are not aware of those?
Thanks
- 3yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
Long-distance real estate investing is a great way to get started in real estate if you live in an area with low demand for rentals. However, there are more risks associated with managing a rental remotely, since you’re not able to be as present as the landlord.
To help you along the process, here are seven tips on remote real estate investing that are important to keep in mind.
1. Research Markets You’re Interested in
Research markets you’re interested in to check the demand for rentals and the types of properties available. Rental reports, like the Realtor.com® Rental Housing Forecast, share insights on rental market trends and predictions that landlords, tenants, and real estate investors can expect in the upcoming year.
There are also certain things you’ll want to look out for in a rental property, such as property taxes, local schools, average rents, amenities, and property history before looking to buy. By researching markets you’re interested in and the current rental market, you can get a better understanding of which markets are worth investing in.
2. Check Your Property’s Profitability
Finding a rental property that meets your criteria is just the first step of real estate investing. You’ll also want to make sure the property can help generate passive income that can cover operating expenses or other property-related costs.
After totaling your operating expenses and determining a rent price, use a rental property calculator to see if the property you’re interested in would be profitable. The Avail Rental Property Calculator is a free resource you can use to help you determine which property has a higher chance of producing profits from rent payments, as well as whether or not your rent price or operating expenses need to be adjusted.
3. Find Reliable Contractors
The key to long-distance real estate investing is finding a team of reliable contractors that can help fix maintenance issues or be the go-to person for your tenants. Platforms like Yelp, Thumbtack, and TaskRabbit are good resources to use to find highly-rated contractors to rely on.
You can also hire a property manager close to the property to manage all maintenance and repair issues. If you do decide to hire a property manager, you’ll want to ensure they’re aware of local landlord-tenant laws and local ordinances they’ll need to abide by when managing your tenants.
4. Implement a Solid Tenant Screening Process
Implementing a strong tenant screening process increases the likelihood of finding a tenant that pays rent on time and takes care of your property. You can request a rental application, credit check, criminal check, and eviction check to get a full picture on prospective tenants. Some states restrict exactly how much a landlord can screen a tenant, so make sure the process you implement does not violate local regulations.
5. Leverage Landlord Software to Manage Your Rentals
Property management software platforms like Avail allow you to streamline the rental process — all in one place. Instead of having to use more than one website, you can screen tenants, collect rent payments, create lawyer-reviewed lease agreements, manage maintenance requests, and more through one platform.
If you decide to hire a property manager, they can also use Avail to manage your rental, which you can access at any point.
6. Request Videos and Photos of the Property
Thanks to smartphones, you can now request videos and photos of your property from your tenants throughout the lease term. Videos and photos allow you to see the current state of your property or get a better look at maintenance issues. However, it’s important to never rely solely on videos and photos since they can be easily manipulated by the sender.
7. Schedule Annual Visits
It’s important to schedule a visit at least once a year to get a closer look at the current state of your rental. Most states do not allow the landlord to show up to the property without proper notice, so your tenants will need to be notified before the visit.
During the visit, you can thoroughly check your property and ask your tenants about any issues they may be experiencing.All the best!
NETWORTH BUILDERS5236 Reviews - Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes3y
I probably wouldn't reccommend a sight unseen for your FIRST investment property.
- Accountant · 100% Remote · Member since 2019 · 495 posts · 216 votes3y
Quote from @Antonio Chelala:
Quote from @Max Emory:
@Antonio Chelala, I don't have a seller financing template contract but I'm sure some of the courses/programs that are out there have one. Contracts to purchase real estate will be state-specific.
For the duplex we just secured with seller financing, I found a template offer to purchase contract online specific to the state and made sure it contained everything I'm used to seeing in a purchase contract. Then, I added addendums as applicable and a promissory note. Then, had our law firm add anything else that was needed.
You can write into the contract that there will be no penalties for paying off the note in full early. That's the beauty of creative finance. Everything is up to you and the other party in the transaction. You have a lot more control over the terms of the agreement.
Makes sense, thanks for the information! On average how much do you pay for lawyers to look over the contract, do they help fill out necessary things, in case you are not aware of those?
Thanks
Hey @Antonio Chelala, the firm will most likely charge their hourly rate. As long as the contract you provide is pretty comprehensive it should only cost an extra couple hundred bucks. And, yes, they will help you with filling out portions of the contract if it's incomplete or you have questions.
They can also provide you a contract but that will be more expensive.
- Member since 2022 · 45 posts · 5 votes3y
Quote from @Wale Lawal:
Long-distance real estate investing is a great way to get started in real estate if you live in an area with low demand for rentals. However, there are more risks associated with managing a rental remotely, since you’re not able to be as present as the landlord.
To help you along the process, here are seven tips on remote real estate investing that are important to keep in mind.
1. Research Markets You’re Interested in
Research markets you’re interested in to check the demand for rentals and the types of properties available. Rental reports, like the Realtor.com® Rental Housing Forecast, share insights on rental market trends and predictions that landlords, tenants, and real estate investors can expect in the upcoming year.
There are also certain things you’ll want to look out for in a rental property, such as property taxes, local schools, average rents, amenities, and property history before looking to buy. By researching markets you’re interested in and the current rental market, you can get a better understanding of which markets are worth investing in.
2. Check Your Property’s Profitability
Finding a rental property that meets your criteria is just the first step of real estate investing. You’ll also want to make sure the property can help generate passive income that can cover operating expenses or other property-related costs.
After totaling your operating expenses and determining a rent price, use a rental property calculator to see if the property you’re interested in would be profitable. The Avail Rental Property Calculator is a free resource you can use to help you determine which property has a higher chance of producing profits from rent payments, as well as whether or not your rent price or operating expenses need to be adjusted.
3. Find Reliable Contractors
The key to long-distance real estate investing is finding a team of reliable contractors that can help fix maintenance issues or be the go-to person for your tenants. Platforms like Yelp, Thumbtack, and TaskRabbit are good resources to use to find highly-rated contractors to rely on.
You can also hire a property manager close to the property to manage all maintenance and repair issues. If you do decide to hire a property manager, you’ll want to ensure they’re aware of local landlord-tenant laws and local ordinances they’ll need to abide by when managing your tenants.
4. Implement a Solid Tenant Screening Process
Implementing a strong tenant screening process increases the likelihood of finding a tenant that pays rent on time and takes care of your property. You can request a rental application, credit check, criminal check, and eviction check to get a full picture on prospective tenants. Some states restrict exactly how much a landlord can screen a tenant, so make sure the process you implement does not violate local regulations.
5. Leverage Landlord Software to Manage Your Rentals
Property management software platforms like Avail allow you to streamline the rental process — all in one place. Instead of having to use more than one website, you can screen tenants, collect rent payments, create lawyer-reviewed lease agreements, manage maintenance requests, and more through one platform.
If you decide to hire a property manager, they can also use Avail to manage your rental, which you can access at any point.
6. Request Videos and Photos of the Property
Thanks to smartphones, you can now request videos and photos of your property from your tenants throughout the lease term. Videos and photos allow you to see the current state of your property or get a better look at maintenance issues. However, it’s important to never rely solely on videos and photos since they can be easily manipulated by the sender.
7. Schedule Annual Visits
It’s important to schedule a visit at least once a year to get a closer look at the current state of your rental. Most states do not allow the landlord to show up to the property without proper notice, so your tenants will need to be notified before the visit.
During the visit, you can thoroughly check your property and ask your tenants about any issues they may be experiencing.All the best!
Great great, absolutely amazing advice. Thank you Wale, this is really helpful
- Member since 2022 · 45 posts · 5 votes3y
Quote from @Max Emory:
Quote from @Antonio Chelala:
Quote from @Max Emory:
@Antonio Chelala, I don't have a seller financing template contract but I'm sure some of the courses/programs that are out there have one. Contracts to purchase real estate will be state-specific.
For the duplex we just secured with seller financing, I found a template offer to purchase contract online specific to the state and made sure it contained everything I'm used to seeing in a purchase contract. Then, I added addendums as applicable and a promissory note. Then, had our law firm add anything else that was needed.
You can write into the contract that there will be no penalties for paying off the note in full early. That's the beauty of creative finance. Everything is up to you and the other party in the transaction. You have a lot more control over the terms of the agreement.
Makes sense, thanks for the information! On average how much do you pay for lawyers to look over the contract, do they help fill out necessary things, in case you are not aware of those?
Thanks
Hey @Antonio Chelala, the firm will most likely charge their hourly rate. As long as the contract you provide is pretty comprehensive it should only cost an extra couple hundred bucks. And, yes, they will help you with filling out portions of the contract if it's incomplete or you have questions.
They can also provide you a contract but that will be more expensive.
Great! thank you.
- 3yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
Quote from @Antonio Chelala:
Quote from @Wale Lawal:
Long-distance real estate investing is a great way to get started in real estate if you live in an area with low demand for rentals. However, there are more risks associated with managing a rental remotely, since you’re not able to be as present as the landlord.
To help you along the process, here are seven tips on remote real estate investing that are important to keep in mind.
1. Research Markets You’re Interested in
Research markets you’re interested in to check the demand for rentals and the types of properties available. Rental reports, like the Realtor.com® Rental Housing Forecast, share insights on rental market trends and predictions that landlords, tenants, and real estate investors can expect in the upcoming year.
There are also certain things you’ll want to look out for in a rental property, such as property taxes, local schools, average rents, amenities, and property history before looking to buy. By researching markets you’re interested in and the current rental market, you can get a better understanding of which markets are worth investing in.
2. Check Your Property’s Profitability
Finding a rental property that meets your criteria is just the first step of real estate investing. You’ll also want to make sure the property can help generate passive income that can cover operating expenses or other property-related costs.
After totaling your operating expenses and determining a rent price, use a rental property calculator to see if the property you’re interested in would be profitable. The Avail Rental Property Calculator is a free resource you can use to help you determine which property has a higher chance of producing profits from rent payments, as well as whether or not your rent price or operating expenses need to be adjusted.
3. Find Reliable Contractors
The key to long-distance real estate investing is finding a team of reliable contractors that can help fix maintenance issues or be the go-to person for your tenants. Platforms like Yelp, Thumbtack, and TaskRabbit are good resources to use to find highly-rated contractors to rely on.
You can also hire a property manager close to the property to manage all maintenance and repair issues. If you do decide to hire a property manager, you’ll want to ensure they’re aware of local landlord-tenant laws and local ordinances they’ll need to abide by when managing your tenants.
4. Implement a Solid Tenant Screening Process
Implementing a strong tenant screening process increases the likelihood of finding a tenant that pays rent on time and takes care of your property. You can request a rental application, credit check, criminal check, and eviction check to get a full picture on prospective tenants. Some states restrict exactly how much a landlord can screen a tenant, so make sure the process you implement does not violate local regulations.
5. Leverage Landlord Software to Manage Your Rentals
Property management software platforms like Avail allow you to streamline the rental process — all in one place. Instead of having to use more than one website, you can screen tenants, collect rent payments, create lawyer-reviewed lease agreements, manage maintenance requests, and more through one platform.
If you decide to hire a property manager, they can also use Avail to manage your rental, which you can access at any point.
6. Request Videos and Photos of the Property
Thanks to smartphones, you can now request videos and photos of your property from your tenants throughout the lease term. Videos and photos allow you to see the current state of your property or get a better look at maintenance issues. However, it’s important to never rely solely on videos and photos since they can be easily manipulated by the sender.
7. Schedule Annual Visits
It’s important to schedule a visit at least once a year to get a closer look at the current state of your rental. Most states do not allow the landlord to show up to the property without proper notice, so your tenants will need to be notified before the visit.
During the visit, you can thoroughly check your property and ask your tenants about any issues they may be experiencing.All the best!
Great great, absolutely amazing advice. Thank you Wale, this is really helpful
My pleasure.
Keep learning and growing always.
Good luck!
NETWORTH BUILDERS5236 Reviews - Member since 2023 · 6 posts · 3 votes3y
have you read the book, long distance real estate investing? It gives you a list of thing you should have in place when interested in buying out state
I am planning on doing the same thing this coming sprint... getting ready for it now!
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