Long distance real estate investing

Long distance real estate investing

Rental Property Investor · Madison, AL · Member since 2019 · 25 posts · 15 votes

Hello BP nation,

So I am currently in the educational phase inching closer to the idea of buying my first property. I have listened to over a hundred bigger pocket's podcast (both the real estate one and real estate rookie), read both long distance real estate investing and the BRRRR book, and even made my own spreadsheet so I could analyze deals. I love the idea of the BRRRR strategy, however with my current job, I am never in one place for long. For instance I just came back from Japan for a 5 month work trip, and I am about to travel to San Diego for an 11 month work trip, and I currently live near Tacoma, WA (probably spend the least amount of time home between those two places). At this point I think my only option is to invest in long distance real estate if I want to join the real estate investing club. I don't want bite off more than I can chew with my first deal, so as of right now I think I should stick with just long distance real estate investing with the plan of doing some BRRRR deals down the road when I get more comfortable with owning some properties of my own.

So my question is, what were some of the things you all wish you knew, or glad you had the knowledge of, prior to doing your first long distance deal?

Bonus question, if you had around $80k to work with, how would you go about using it in this situation?

I know this was long winded, and very about me, however I do really appreciate people taking the time to read this and any responses.

Cheers!

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Andrew SyriosPro Member

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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes

6y

I would say the big thing is to wipe your mind clean of assumptions that you have from the market you are in. Out of state deals will likely be cheaper than anything you've seen locally, but cheap doesn't mean good. Bad areas with bad management won't cash flow. Also, vet the team you are using carefully and don't be afraid to switch.

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Kevin Pfeil
OP
Rental Property Investor · Madison, AL · Member since 2019 · 25 posts · 15 votes
6y
@Stephen Fryer thank you for a very descriptive overview of how you run a flip and rehab! That's all great information to know. Seems like the systems you have in place is what has made you so successful. That with a clear outline of how the draws work and the communications that you establish with your team all seem easy to duplicate and follow. I think the point that I like the most in that entire write up was the fact that you go to South bend not so much to scope out the properties, but to make relationships with the people. I think that is your make or break for a situation like that. If you have quality people that you trust in place, you are bound to succeed! Thanks so much for that great insight!
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Kevin Pfeil
OP
Rental Property Investor · Madison, AL · Member since 2019 · 25 posts · 15 votes
6y
@Steve Morris Thanks for all that information. That all makes sense. Yeah before I get into any deal I plan on being pre-approved for a loan so I know what I am getting into. I understand not having debt, however I think leveraging your money is quite beneficial in acquiring properties. Definitely need to make sure you don't over leverage and have sufficient cash reserves, but I think we have a great system here in the states as far as our loans go. I did enjoy the points about property management and selecting the area you want to invest in. All those items you looked at in an area seems like it can really add to the appreciation of a property and lead to quality tenants.
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Kevin Pfeil
OP
Rental Property Investor · Madison, AL · Member since 2019 · 25 posts · 15 votes
6y
@Andrew Syrios That seems like a smart path forward. Also I just listened to your podcast episode on bigger pockets and it was a great episode! Seems like your family has worked great together. It was an entertaining episode and very informative and easy to digest. I liked the IDEAL acronym that your dad uses. Anyways thanks for all them help and information!
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Lindsay DavisBusiness Member
Real Estate Broker · Birmingham, AL · Member since 2019 · 326 posts · 203 votes
6y
Hello @Kevin Pfeil

When it comes to long-distance real estate investing, success depends on putting together a team you can trust, which may include any of the following: real estate attorney, escrow officer, accountant, insurance agent, contractor, realtor, and property manager. Especially important is having a reliable contractor. Anyone who’s spent time investing in real estate will tell you that no matter how good the rest of your team is, you won’t find much success without a good contractor.

When it comes to building your team, you have two main options: finding each individual on your own or working with a full-service turn-key provider. One of the perks of working with a full-service turn-key provider is that you don’t have to put together an entire team - it’s all there.

If you have any questions about turn-key investing and what it includes, just let me know.

Lindsay

205-205-4118
Spartan Invest4.8133 Reviews
Website View Page
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Kevin Pfeil:
@Andrew Syrios That seems like a smart path forward. Also I just listened to your podcast episode on bigger pockets and it was a great episode! Seems like your family has worked great together. It was an entertaining episode and very informative and easy to digest. I liked the IDEAL acronym that your dad uses. Anyways thanks for all them help and information!

Thanks Kevin, I'm glad you enjoyed the podcast. And yes, the IDEAL acronym is a great one to understand the power of real estate.
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Kiera Underwood:
@Andrew Syrios I understand the thinking but disagree. I'm sure that's a rule that could work in some markets but In OKC the sweet spot is definitly C class rentals. I don't think someone needs to live in D class in another market in order to take advantage of that. If a provider focuses on a class and has a history of doing well there, I think it's a safer bet.

It's alright to disagree. Although I believe Internet etiquette demands that we hate each other forever and send an extremely long thread of hate posting... maybe next time.

While I think investing in D areas can work (although it's tougher and I would avoid "F areas" unless you're an expert in those). It's just when you're far away, the problems that often plague D properties compounds on itself.

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Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Andrew Syrios great point. I'd steer clear if your PM is uncomfortable with an area. After all, they'll be on the ground. Even in a C class area if there is a lack of experience, you could have issues if your PM typically focsues on luxury. I wouldn't say totally avoid an area if your PM isn't comfortable, but maybe make some calls for a PM that is! I actually saw the reverse of this recently. A PM that is focused on C class was appointed to manage a 4 plex in the center of our urban core. The small size of the units and the developing street/surrounding areas caused the PM to rent very low to pretty high risk/unpredictable tenants. However, this property had TONS of potential to be a little trendy complex that was a short walk to some of the hottest neighborhoods in OKC. It's being repositioned now, but there were some real problems for a while!
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Kiera Underwood:
@Andrew Syrios great point. I'd steer clear if your PM is uncomfortable with an area. After all, they'll be on the ground. Even in a C class area if there is a lack of experience, you could have issues if your PM typically focsues on luxury. I wouldn't say totally avoid an area if your PM isn't comfortable, but maybe make some calls for a PM that is! I actually saw the reverse of this recently. A PM that is focused on C class was appointed to manage a 4 plex in the center of our urban core. The small size of the units and the developing street/surrounding areas caused the PM to rent very low to pretty high risk/unpredictable tenants. However, this property had TONS of potential to be a little trendy complex that was a short walk to some of the hottest neighborhoods in OKC. It's being repositioned now, but there were some real problems for a while!

I would generally agree, although I wouldn't rely too much on your property' manager's opinion. Yes, take their opinion into account, but don't rely on their opinion solely. If they like the area but you really don't, I would walk regardless of what they said.

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Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
Originally posted by @Andrew Syrios:
Originally posted by @Kiera Underwood:
@Andrew Syrios great point. I'd steer clear if your PM is uncomfortable with an area. After all, they'll be on the ground. Even in a C class area if there is a lack of experience, you could have issues if your PM typically focsues on luxury. I wouldn't say totally avoid an area if your PM isn't comfortable, but maybe make some calls for a PM that is! I actually saw the reverse of this recently. A PM that is focused on C class was appointed to manage a 4 plex in the center of our urban core. The small size of the units and the developing street/surrounding areas caused the PM to rent very low to pretty high risk/unpredictable tenants. However, this property had TONS of potential to be a little trendy complex that was a short walk to some of the hottest neighborhoods in OKC. It's being repositioned now, but there were some real problems for a while!

I would generally agree, although I wouldn't rely too much on your property' manager's opinion. Yes, take their opinion into account, but don't rely on their opinion solely. If they like the area but you really don't, I would walk regardless of what they said.

I agree. It's crazy to me when people say oh well just get a good PM and they can guide you! Since when are they, investment specialists? That's a risky call in my book. I'm just pointing out that there's the value behind a PM telling you they're very comfortable in an area you're digging into.
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Kiera Underwood:
Originally posted by @Andrew Syrios:
Originally posted by @Kiera Underwood:
@Andrew Syrios great point. I'd steer clear if your PM is uncomfortable with an area. After all, they'll be on the ground. Even in a C class area if there is a lack of experience, you could have issues if your PM typically focsues on luxury. I wouldn't say totally avoid an area if your PM isn't comfortable, but maybe make some calls for a PM that is! I actually saw the reverse of this recently. A PM that is focused on C class was appointed to manage a 4 plex in the center of our urban core. The small size of the units and the developing street/surrounding areas caused the PM to rent very low to pretty high risk/unpredictable tenants. However, this property had TONS of potential to be a little trendy complex that was a short walk to some of the hottest neighborhoods in OKC. It's being repositioned now, but there were some real problems for a while!

I would generally agree, although I wouldn't rely too much on your property' manager's opinion. Yes, take their opinion into account, but don't rely on their opinion solely. If they like the area but you really don't, I would walk regardless of what they said.

I agree. It's crazy to me when people say oh well just get a good PM and they can guide you! Since when are they, investment specialists? That's a risky call in my book. I'm just pointing out that there's the value behind a PM telling you they're very comfortable in an area you're digging into.

Absolutely. In addition, PM's want business, so their incentives aren't aligned with making sure you invest in secure areas.
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Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Andrew Syrios makes sense that people like when PM and provider are both in-house. That way if PM has tons of turnover you can look to the whole company for wrongly advising you instead of PM telling you that you made a bad purchase.
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Kiera Underwood:
@Andrew Syrios makes sense that people like when PM and provider are both in-house. That way if PM has tons of turnover you can look to the whole company for wrongly advising you instead of PM telling you that you made a bad purchase.

That's true, although you shouldn't settle for their in house manager necessarily. You should interview them and look around (and not be afraid to drop your PM if they aren't getting the job done).
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Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Andrew Syrios agreed! Don't just default. I'm a big fan of asking for references. If they've made a lot of people happy then that's a good sign. That and reviews!
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Originally posted by @Kiera Underwood:
@Andrew Syrios agreed! Don't just default. I'm a big fan of asking for references. If they've made a lot of people happy then that's a good sign. That and reviews!

Exactly, that goes for just about every contractor, vendor, banker or other professional you'll work with in real estate too.
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