Rental Property Investor · Fort Worth, TX · Member since 2021 · 31 posts · 8 votes
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.
@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!
I can't address your PoA question, but I do wonder why you wouldn't go with a more passive type of real estate investing?
Personally I would be very wary of giving too much control to any property manager. They still need to be managed. If they have too much control and you have to terminate their contract it'll be a mess! That's the main reason I'd look for a more passive investing strategy.
@Kelvin J. the "L" in LPOA narrows the scope of what the POA is for. What exactly and what specifically is the person going to do for you? Purchase deals? Manage properties you already own? Contract out rehab crews on properties? If you have a deal not yet closed then it may be wise to boost the agency level of your RE agent to sign any last-minute documents for you for that one closing alone (and make sure all possible documents they might need are in their hands). But if you don't have a purchase contract in escrow, the rest of your team should be able to do their work without the LPOA. PM can manage; GC can contract; and without sales in escrow the RE agent and mortgage guy have nothing to do until your next purchase.
@Ronald Allen Barney thanks for your insights! My initial thoughts were in regards to closing papers. For example, if I was in the middle of a purchase but had to head out the door before we closed. Or if I was overseas and someone fed me a hot lead that I didn’t want to slip away before I got home to take advantage of it. I’ve closed on a primary residence while traveling before and the stress of getting away from work and finding a legal notary and reliable courier in some of these third world countries is not something I relish. Not to mention the strain on negotiations with the seller due to different time zones, documents in the mail and unpredictable timelines. It was all just a hassle I intend to avoid as an investor. I’ll talk with my agent and a lawyer to see how much “limited” powers they’re comfortable with and/or recommend.
It does sound like there is no reason the rest of the team couldn’t work with me via phone or email though which is helpful. I appreciate your time!
@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?
If cash you can probably use one of the online notaries now....often that won't work with financing.
I would not give it to your agent or PM. Give to a friend or family member if you need to do it, even if they are across the country they can sign remotely.
Too much risk for both parties of having your real estate agent do it.
@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!
@Taylor L. An absolute ton of wisdom in your response thank you so much for your time. I’ll do a bit more digging into turnkey as it may be a good way to get my foot in the door. And honestly I hadn’t even heard of syndicates outside of the Mission Impossible franchise so that was a huge blind spot for me. Thanks for highlighting that! I’ll follow Travis Scott ASAP and keep in the books. I appreciate all you do for us freshies out here.
@Bruce Lynn I appreciate the advice. I suppose sending a family member on a weekend trip is a small cost for the decrease in risk. I’ll be financing my first few properties at least. I have explored the digital notaries but just as you mentioned my lender in the past was not comfortable with it as I was financing.
@Kelvin J. I've used POA a number of times while overseas. I've used family members or close friends. Depending on lender, usually it doesn't matter where your delegated POA lives as most lenders allow out of state notaries to close. The biggest constraint that I have come across is whether your lender needs the closing docs to be signed in-state or not.
If you don't set up the POA before you head overseas, you can always designate a POA using an overseas US embassy to notarize the POA docs.
@Allan C. I’m glad that’s worked for you, it didn’t occur to me that just because my family is out of state that it may not be an issue. I’ll reach out to my local lenders and see their stance on it. Thanks the info!!
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
I regularly work with investors from all over the world who are buying properties remotely and the good news is that I can tell you that you don't need a power of attorney. You don't have to be stateside to sign for your deals. Most papers can be signed electronically and anywhere there is a US Consulate can handle things that need a wet signature in front of a notary.
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
I regularly work with investors from all over the world who are buying properties remotely and the good news is that I can tell you that you don't need a power of attorney. You don't have to be stateside to sign for your deals. Most papers can be signed electronically and anywhere there is a US Consulate can handle things that need a wet signature in front of a notary.
Also, protip, check out James Wise's YouTube channel for more detailed information about what can go wrong if you do not do your due diligence on turnkey properties, and tips on the top ways to avoid many common mistakes & problem properties. Great content!
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
Questions on my mind:
-Any "gotchas" in setting up LPOA and making deals with an agent remotely? Be sure the authority is clearly described, a lot of lenders or title companies want very specific language, i.e. the property address and price/loan etc.
-Are there greater legal risks or common pitfalls associated? Yes, I'd worry about liability or miscommunication. If you say, "only sign if X happens" that person has to make a judgment call which is tough.
-For those of you who have done this, is your power of attorney through your name personally or as a member of your LLC? POA would be for an individual, I wouldn't add them as a member of your LLC unless they are putting capital in.
-Other than my agent, should there be any other team members with LPOA such as lawyers or property management? Definitely hire a lawyer :) We do this a lot with international clients.
Out of state is still difficult due to time zones and coordination, I hear a lot of complaints from people just doing "a favor" when they have to drive to a notary or fedex something. Up to you if this is a family thing you want to call a favor for or if its a business.