I am currently in the foreign service and a Marine reservist. I have my money diversified between my Thrift Savings Plan (maxing out), investments with my in-laws construction business overseas, an S&P 500 SPDR, and a healthy savings. I will be working at one our embassies next year in the Middle East and want to know how difficult it will be to manage a property from a far. Most of my career in the military has been overseas and the foreign service will be more of the same. Right now I am looking at Metro-Detroit to do AirBNB which I have done in the past next to the Pentagon. I am also looking at a traditional rental property in Tampa/St. Pete which will be near MacDill AFB. I anticipate that property management can handle somethings, but do I physically need to be near to get in the game? The wife and I also just purchased a plot of land in The Philippines in a resort area and have plans to build on it later (Tagaytay Highlands).
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Michael Ross I was a security contractor for 13 years and I still have 19 rentals that I picked up in 2011-2013. During my time home, I was able to buy these condos at trustee sale and transition them to rentals. The key was having a great business partner and a great team to manage the properties. IMO, to set things up properly and solidify your relationships, you should spend time on the ground in the area you want to have your properties in. The next best thing is to have a solid business partner back home that can fill in for you if and when it's needed. Once everything is set up properly, it's not so difficult dealing with spotty internet, lack of notarial services, and different time zones. Technology is making long distance problems easier and easier to deal with.
Although I still have those rentals and they are headache free for me now, it wasn't always so and I'm not planning to buy more. I love notes and they are much more passive and easier to manage from abroad. Invest in a note fund or commmercial real estate syndication and it's even more passive.
I am in Okinawa right now and purchased my first property while here.
My property managers take care of everything for me and it was decently easy, with the only problems being the time difference and having to print and sign and send back documents.
I’m unsure on managing for air bnb properties as that is much more hands on.
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Michael Ross I was a security contractor for 13 years and I still have 19 rentals that I picked up in 2011-2013. During my time home, I was able to buy these condos at trustee sale and transition them to rentals. The key was having a great business partner and a great team to manage the properties. IMO, to set things up properly and solidify your relationships, you should spend time on the ground in the area you want to have your properties in. The next best thing is to have a solid business partner back home that can fill in for you if and when it's needed. Once everything is set up properly, it's not so difficult dealing with spotty internet, lack of notarial services, and different time zones. Technology is making long distance problems easier and easier to deal with.
Although I still have those rentals and they are headache free for me now, it wasn't always so and I'm not planning to buy more. I love notes and they are much more passive and easier to manage from abroad. Invest in a note fund or commmercial real estate syndication and it's even more passive.
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Michael Ross It depends on the offering. Check out some of the real estate crowdfunding platforms. RealtyShares, Patch of Land, etc. I've checked out their websites but have never invested with any of them. I've used Groundfloor as a borrower and was impressed with the experience. You can become a lender and crowdfund a hard money loan through them. I haven't done that yet so I don't know what it's like from that side.
I'm sure if you google "commercial real estate private placement offering" you could find plenty of syndications but those would only be open to accredited investors if they are using general solicitation. If you get to know some of the syndicators on BP or elsewhere they might be able to steer you in the right direction for funds that are open to non accredited investors.
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Blair Lee Are you referring to the headaches involved in holding rentals or the headaches in managing rentals or other investments from overseas?
For rentals: it's a personal thing for me. My rentals are located in a lower socio economic area. You get higher cap rates because the investments involve more risk. With this tenant type, in general, you get higher rates of late payments, non-payments, evictions, complaints, wear and tear to the property, damage, and drama. If you don't want to self manage, you need to get a property manager that you can trust, which is its own issue. Even with a property manager, you have to make the higher level decisions that they bring to you. Then you have to pay the bills like utilities, city, state, and other local taxes. For condos, you have the added burden of dealing with HOAs. For me, it took too much of my time. I'll get a fantastic rate of return because I used OPM but I wouldn't do this if you want a substitute job. I recommend fix and flip of real estate or notes for that. I'm at the point where I don't want to deal with any of the issues regarding residential rentals. I'm interested in commerical rentals at some point in the future. Much different tenant type.
Headaches of managing from far away include:
1. Lack of notary (Embassies and some consulates have notaries but it varies as to what types of documents they will notarize for you)
2. Inability to get real eyes on your investment. When you don't have a good team in place, this is a weakness. I haven't been to any of my rentals in years but it's nice to know that if something happened to my property manager, I could drive out to those properties and deal with them personally. No one will care about your asset as much as an owner will. I'm an advocate of having a trusted business partner as boots on the ground that has just as much invested in the outcome of the investment as you do.
3. Time difference. Email is great but sometimes the only way that you can sort out a problem is over the phone (better yet in person but most things can be solved on the phone). You will have to adjust to calling people back home on their time, which is typically Mon - Fri, 8 am - 5 pm. Technology is making the caller ID thing better but I would have to call people via Skype and most calls would go to voicemail. I had no way to accept incoming calls so this was problematic. With WIFI calling, I was able to receive calls in the last couple of years, which made a huge difference.
4. Establishing relationships with members of your team is more difficult to do long distance but there are workarounds. Meeting them in person once or twice will go along way to solidifying your relationships and developing trust. You have to be able to trust your team members to handle problems on your behalf and give you truthful, unbiased information about your assets so that you can make the right decisions.
There may be more but this is what first comes to mind....
I bought in a good city near my hometown. I’ll admit I am still unfamiliar with the city from a boots on the ground perspective, but from a real estate perspective I am getting the hang of it. It all came down to me finding an appropriate property manager and realtor. I wanted ones who invested themselves and had a good reputation in my city. I searched and read plenty of reviews beforehand finding he agent and property manager I wanted to work with.
I told him what I wanted and planned and he gave me both his personal and professional opinion on all houses and told me straight up if an area was going to be bad or good. We narrowed it down to 3 houses and I jumped on the one that looked the best. He was my boots on the ground and kept me updated every step of the way. He sent videos and spreadsheets and had my best interests in mind.
After that we set out to get the paperwork done. The saying that good people know other good people is true. My realtor recommended the loan broker I ended up using as well, who also had his own investments.
It all comes down to finding that good team on the ground. I still have family in the area so I know that if needed I can count on them as well, but so far I haven’t had to. It is a little scary not having your own eyes on the property but there is that certain level of trust you have to have through proper vetting of your team.
Ask any questions you need brother and I’ll try to elaborate as much as I can.
@Steven Dreyer, that is my situation in Southwest Florida and Metro-Detroit. I’m trying to figure out if real estate is as simple as I think or extremely complicated as others say. I anticipate that there are many wannabes who wish they were in the game. Bigger Pockets has fueled a decade long drive to buy real estate. How much do you pay a month for the property management?
@Michael Ross I have been researching real estate since November of 2016. I just bought my first one in June so I spent a good portion of time reading and planning. It takes a bit but is definitely worth it.
As far as complication, I think that it is simple, but not easy. It is definitely a decent amount of work and time but it is only as hard as you make it. Again, finding a good team who has experience working with new guys is vital. Understand you can’t control everything and there will be problems. To me, note investing seems crazy because I don’t understand it yet. But once you learn and take the step it becomes so easy. I just wish I could fuel my portfolio by house hacking. Not possible when I’m overseas.
Property management costs usually between 8-12% on average. The company I use charges 10%. Look at everything they cover and see what fees hey have for placing tenants and renewing leases. They should be transparent and have a good reputation. Cheapest isn’t always best.
@Michael Ross honestly it was way simpler and easier than I expected. I’m very hands off so the people I trust take care of me and I take care of them by providing referrals and good reviews and future business.
It was also kinda anti-climactic. Like I bought it and was just like: “...okay so I have a house...” and that’s it. Comes with buying and not living in it I guess. The monthly paycheck is a nice treat though.
Rental Property Investor · Las Vegas · Member since 2018 · 87 posts · 87 votes
8y
@Michael Ross I've been in Asia for the past 6 years and my PM is literally the key to my ability to invest. Your team is everything when you're not there yourself. Whether the process is easy or deeply painful however, depends entirely on your realtor and PM. We communicate mostly through instant messages (which I highly recommend over email) where she only communicates with me on major items such as tenant changes or repairs. She takes repair costs right out of my rentals for that month and just deposits a smaller amount and messages me the receipt.
I was fortunate enough to have built up my team before I left the country, but I still meet them every time I go back. They always take me to lunch when I'm in town, offer to pick me up from the airport, etc. We've got a great relationship because we each make the other a good deal of money. Their rates are on a sliding scale, 10% for rentals below $1,000/mo and 8% for rentals over that. @Andy Mirza is right, you really want to meet with your team when you can. There are online notaries now, but I don't know if they work for real estate transactions as I typically buy on my visits home, and my realtor will have several properties lined up for me to see. I miss out on some deals this way though.
I wanted to minimize the opportunities for issues, so I tend to buy A class properties. It's a personal choice that slows my growth but is more stable for me. Lower turnover and less problems are important for me.
Rental Property Investor · Wiesbaden, Hesse · Member since 2016 · 85 posts · 32 votes
8y
@Michael Ross check out RWN for syndications, normal minimum is 50k, although many syndications require "accredited" status, there are a few which you can jump into with "sophisticated" status but they are not as common.
I am currently in the foreign service and a Marine reservist. I have my money diversified between my Thrift Savings Plan (maxing out), investments with my in-laws construction business overseas, an S&P 500 SPDR, and a healthy savings. I will be working at one our embassies next year in the Middle East and want to know how difficult it will be to manage a property from a far. Most of my career in the military has been overseas and the foreign service will be more of the same. Right now I am looking at Metro-Detroit to do AirBNB which I have done in the past next to the Pentagon. I am also looking at a traditional rental property in Tampa/St. Pete which will be near MacDill AFB. I anticipate that property management can handle somethings, but do I physically need to be near to get in the game? The wife and I also just purchased a plot of land in The Philippines in a resort area and have plans to build on it later (Tagaytay Highlands).
Michael, I've been investing out of country for many years and the bullet points that Andy Mirza outlined mirror exactly what I'd write, so no need to restate. My ability to do this successfully has ENTIRELY been due to an amazing PM and lawyer who has full power of attorney to act on my behalf. I'm currently living in the Philippines (Davao City) and I assume you must be married to a Filipina, otherwise you can't own land in Tagaytay. Beautiful place! The next project I'll be working on is offering Turnkey for a new 40 story condo building.
@Tim Greenfield@Matthew McNeil , thank you. This is giving me the energy and motivation to look at the syndicates and shop around for a PM. I have been lucky in the people I have met in 17 years in government who can be helpful. I am excited that now I am in a position that I can really get in the game. I'm about to get on a phone call to discuss options near Detroit where I grew up and in November I'm looking at properties near Tampa and MacDill Air Force Base.
Bloomfield Hills, MI · Member since 2016 · 48 posts · 12 votes
8y
Hi @Michael Ross, my wife and I live in the Middle East as well and have two investment properties in Detroit ourselves and are currently under contract in purchasing a 3rd investment property. We use a Detroit based property manager as I could imagine it would save a few headaches here and there. Happy to answer any questions you have.
@Nick Yates , that is encouraging. I'm looking at HUD housing and cheaper properties in Wayne County. Are you picking up cheap houses, making them habitable and renting them out?
Bloomfield Hills, MI · Member since 2016 · 48 posts · 12 votes
8y
Whilst we know that would produce better results, we are going down the "easier" path of buying "good" homes in the outer parts of Wayne County (i.e. not downtown). We are still using traditional financing so there is actually a minimum house value that they require. These homes may need some repairs or touch ups which we do before renting out for good cashflow. We hope to research, speak to and get financing through local credit unions who do portfolio lending from next summer onwards. Which areas are you looking for investment properties?
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Blair Lee I forgot a couple of very obvious headaches from the past:
5. Poor internet connectivity - Some parts of the world have poor internet speeds and reliabilty. This was an issue for me all the way up until a few years ago. Things like Skype take a lot of bandwith, sometimes you need to upload or download large files. It was definitely a challenge for me but this will be a problem that goes away as internet connectivity gets better and better as time goes on. In Germany, you probably have better internet than in the U.S. but not if you're a marine stuck on an isolated fob out in Afghanistan. It's been a while, maybe things have gotten a lot better for those guys, too.
6. Inability to scan and print documents - again, this is a problem that's getting better as time goes on but for those in remote areas or traveling, it can be a headache to investing from afar. At one point, it was difficult just to print out documents, sign, scan, and return them although I'm grateful to have had that option at all. I used to download files that I received by e-mail, transfer them to a thumbdrive, print and scan them using a community printer, return to my room, transfer the pdf back to my laptop, then reply to the e-mail. Then, Docusign changed my life and made it way easier.
These headaches are just roadblocks. They make it more difficult but won't stop the truly motivated investor. There are almost always workarounds to most problems.
@Nick Yates, that is exactly what I am looking at. I am looking to spend, after repair costs, no more than $70K, in Westland or Redford area. After all is said and fixed costs considered I am aiming at $100 - $300 cash flow. What do you think?
@Nick Yates, that is exactly what I am looking at. I am looking to spend, after repair costs, no more than $70K, in Westland or Redford area. After all is said and fixed costs considered I am aiming at $100 - $300 cash flow. What do you think?
Unless u buy south of Avondale, not possible.
Same with Redford... Eeds to be east of beech daily
Rental Property Investor · Lodi, CA · Member since 2018 · 14 posts · 10 votes
8y
There is a book called Long Distance Real Estate Investing. I recommend reading that. Everything can be done without having to physically being there. Being physically there gives some people peace of mind, but it really isn't necessary as long as you work with good property management, contractors, real estate agents, etc.
@Nick Yates, that is exactly what I am looking at. I am looking to spend, after repair costs, no more than $70K, in Westland or Redford area. After all is said and fixed costs considered I am aiming at $100 - $300 cash flow. What do you think?
George P is on the ground there so it is good advice on the specific location to look.
I think it is harder to find the properties you are targeting but not impossible. I think your cash flow target is possible but just less properties (<$70k) through which to achieve it. Options are just getting few and far between for your price point unfortunately.
We ultimately pay just a tad more for properties in that area but have good cash flow from them as well.
Rental Property Investor · Detroit, MI · Member since 2018 · 380 posts · 244 votes
8y
@Michael Ross I grew up in that Wayne-Westland area (Inkster as well) and know the area. Homes in the area are a little more than the 70k-80k range but I know people who are buying in that range for homes here. You would have to put light rehab into them but there are deals here. If you have a good PM and buy right I do not see why you wouldn't be able develop a cash flow portfolio in the Metro Detroit area.