Power of Attorney(s) for a frequent traveller

[Kelvin J.]

BLUF: Looking for advice or experiences setting up or using Power of Attorney to conduct deals remotely.

Background: I am a REI newb and reaching that grey area between self education and pulling the trigger on my first rental properties. One thing holding me back is that my current career has me out of country ~6 mo/yr and usually for 3 months at a time. When I leave and where I go is highly unpredictable. I am single and when I am stateside I live (DFW Texas market) across the country from any family members so they're not an option either.

Questions on my mind:

-Any "gotchas" in setting up LPOA and making deals with an agent remotely?

-Are there greater legal risks or common pitfalls associated?

-For those of you who have done this, is your power of attorney through your name personally or as a member of your LLC?

-Other than my agent, should there be any other team members with LPOA such as lawyers or property management?

I sincerely appreciate any knowledge or personal experiences you can share with me. Even if you just have a book or article to turn me on to, I’m happy to take a lead.

-Kelvin

[Taylor L.]

Originally posted by @Kelvin J.:

@Taylor L. Oh no, I thought this was passive real estate investing. Leave it to me to show my ignorance right out the gates with my first post on Bigger pockets haha.

I’ll be working with a property management team from day 1 of my first purchase. I have no intention of being an involved landlord. I can track leads, run the numbers and coordinate financing remotely and I figured I’d leave the renter acquisition and property upkeep to a management team? Optimistically, I front the money and make the purchase and that’s the end of my involvement. Do you have any suggestions for being even more passive than that? Or were you referring to investing in things like REITs or maybe just being a private money lender for other investors?

Thanks for your help, I appreciate it!

 You bet - and 'ignorance' is a bit too harsh! Each strategy has some degree of time commitment. Some strategies require more time than others. Strategies that require less day to day time commitment can include syndications, notes, lending, and turnkeys. Syndications have the lowest time commitment for investors because your time is spent almost 100% on the front end, finding and evaluating syndication teams and deals. Once you're invested, as an LP, you have no management responsibility. 

I see lending as probably the most risky of that list, because if you don't know how to evaluate a borrower, a deal, capital stack, and so forth, your potential losses can be pretty large. The check sizes tend to be big on private loans as compared to the others mentioned above. I think lending is best left for experienced investors who have done some flips or other deals, and know how to run the numbers and protect their downside.

Turnkeys are a divisive topic on BiggerPockets. They're almost never going to be an absolute home run deal, but for many investors they are a good way to get started, learn the ropes, and get some cash flow going with someone helping you along the way (the turnkey provider).

I leave REITs off the list because REITs are a bit more like owning a stock than owning real estate, in my opinion. Not that it's bad, per se, it's just not the same.

No matter which route you choose, you must do due diligence. That may sound like an obvious given, but you'd be surprised how often folks do very little dd before diving in headfirst.

The most critical thing is that it is not wise to bank on never having to manage your property manager. For syndications, the General Partnership does that for you. For turnkeys, you're monitoring their performance and providing guidance. Property Managers require oversight just as much as anyone else you may employ in business. "Set it and forget it" has cost a lot of investors a lot of money!

No matter which route you choose, BP has informative books that can give you a good understanding of what to do. Investing $100 in a few books that could prevent you from making a $20k mistake and/or help you make an additional $100k is a good deal by my eyes!

Look up @Travis Watts and his story of working overseas in the oil fields and investing in turnkeys, eventually shifting to syndications. Very informative.

Those are just a few thoughts. Remember that many others with similar work lives have successfully invested in real estate, so there's no reason you can't do it too!