Long Distance Land Lording

Buying & Selling Real Estate
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Long Distance Land Lording

Trevor Lohman
Investor · Redlands, CA · Member since 2013 · 177 posts · 76 votes

Hi Everyone,

I am fully prepared to take some heat for asking this question, and recognize many of the problems with long distance income property ownership and investing in a "network" but wanted to ask anyway.

I'm 24 and spend probably about 50-60 hours a week working. I'm making what I consider good money (roughly 150 thousand a year pre tax). While I don't necessarily love my job, I don't see myself having the courage to quit and jump into real estate at any major capacity in the next five years. I'm at a time in my life when I'm saving for all kinds of things (wedding, new car, investing) and feel much more comfortable with what is a reasonably steady income (I know no job is guaranteed) I am not a huge fan of leverage, or debt of any kind, which is why I'm putting away money like crazy. I think within this year I would have the money to buy a lower end house in a few other parts of the country that seem to make a lot of sense to me. I do not however see myself having a tremendous amount of time to manage these properties though.

I am wondering if anyone has heard much about or invested in Jason Hartman's platinum properties network. I have listened to his podcast for quite a while, and his investing principles seem to strike me as being inline with bigger pockets philosophy, and my own philosophy. His network does not strike me as guru-ie (is that a word?) but at the same time it is an investment network managed by someone else, which I know many investors would likely call a suckers bet.

Does anyone have any experience with Platinum Properties? Or does anyone want to tell me how crazy I am for considering it lol? At this point it is either get involved in something like this, get some skin in the game, and learn from my experience, or just save my money away for the next five years until I'm at a point where I feel more comfortable ratcheting back from work, and try to become a part time buy and hold investor on my own.

Either way I plan on getting involved in managing my own real estate down the road, but thought this may be a viable way to get started and learn in the mean time.

What do you guys think? Thanks for the help!

Trevor

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Riley F.
New York City, NY · Member since 2013 · 136 posts · 76 votes
12y

I have done a lot of browsing turnkey property sites, and I have to say that the markup takes a lot of the gristle off of the transactions, not in all cases, but in many.

My advice to you, based on what I am doing and have found useful so far, is to choose 1 market, contact 10 buyers agents, and interview them. You can get some basic interview questions off of this site, and they will go a long way toward picking 1 - 3 to work with (each in different areas). Ask each what markets they specialize in, because each area that you're looking will have areas that very dramatically, even within 5-10 miles of one another. Then call 5 or so property managers and tell them that you are an out of state buyer, pre-approved for a mortgage, are shopping for properties and are going to need a property manager. Ask them what neighborhoods the like to rent in, what home features they like in their rental properties to keep vacancy down, and what you can expect as far as cap rate. After the conversation ask if they mind if you bounce ideas off of them OCCASIONALLY, take their name and email, and followup with a thank you note, handwritten to their office. You should ask the same of the buyers agents.

Once you have a handle on the market, ask the buyers agents to set you up with automated MLS emails with the criteria that you've set based on the above. I would recommend focusing on REOs and HUD homes, but it's your call, you can certainly find deals on the MLS outside of those bounds. Then start to comb these emails, run comps (use Zillow recently sold, Zilpy, Padmapper, Hotpads, and Rentometer) to run sales and rental comps. You'll start to get an idea of what things are priced at in each area. Keep track of the properties that you think are worthwhile in a spreadsheet for a few months while you are getting a handle. You can use the realtors and property managers that you've contacted to verify the properties that pass your prescreen before you actually make offers.

I wish that someone gave me the above before I embarked, because it would have saved me 3 months of trial and error. While I haven't bought a home, I've made many offers, and plan to continue to do so. This should get you started. "Building a team" sound daunting, but it's really just about relationships.

I hope that this helps.

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  • Adam Gerig
    Investor · Fort Wayne, IN · Member since 2012 · 276 posts · 77 votes
    12y

    @Brian Ortins appreciate the mention. Our company does try to provide turn-key solutions, but also several different options to out-of-state and in-state investors.

    The biggest problem I see with turn-key operations is that they aren't providing anymore service than you'd get buying off the MLS or that they are even worse over charging you for a property. I have 2 new owners who have both just bought properties in Fort Wayne that were off-market deals that I sourced for them. 2 of the 3 are rented and cash-flowing and they were bought right. The third one is currently being rehabbed of which I am coordinating the whole thing and have gotten quotes and sent to the owner before work even started.

    Just last week I jumped on a thread about Storybrook, whom I've never heard or dealt with so this is my own personal opinion, whom were charging like $6k in miscellaneous fees. A PM setup fee and another certain fee just for buying a property of close to $6k?? While I do believe there is a value I am adding to service my owners in attaining properties I couldn't sleep at night if I 1)got them a property that was at 100% FMV 2) charge them erroneous fees.

    My philosophy is if you do right it will snowball so with one of my new owners, who has given me permission to tag him @Tony Salazar I sourced him the deal, am handling the rehab of one of the two properties he bought, and feel like I've given him a good equity position as well as rental properties that should cash-flow for him day 1.

    I didn't charge him any setup fees or coordination fees or anything of the likes. Now don't get me wrong I still get the management fees so I'm not just doing this for free, but hopefully if I do by him right I'll get more owners or even better Tony can buy more. Then I've just increased my portfolio and helped someone out who then in turn should he ever go to sell I'll probably get to be the seller's agent and make 6% on the back-end.

    How can you do this as a turn-key operation if you aren't in the city you are selling turn-key properties in??? Honestly, maybe there are some that can, but I wouldn't or couldn't. You don't know what areas are good areas, or the actual values of the homes there, and are selling properties at 100% of the value (or more in some cases I've seen). Where's the value in that to the owner/buyer??

    ***HOPS OFF SOAPBOX*** Sorry for writing a novel my intentions were to be short and sweet and somehow it went disastrously wrong lol.

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  • Trevor Lohman
    OP
    Investor · Redlands, CA · Member since 2013 · 177 posts · 76 votes
    12y

    Thank you so much everyone, this thread has been incredibly helpful for me and I am sure for many others. I still don't know exactly how I will move forward, but I am without a doubt more educated now and have many different things to read and research. @Adam Gerig Your philosophy sounds ideal. The main thing preventing me from going the turnkey route is knowing that I am instantly losing a not insignificant percentage of my original capital invested to fees. Now, obviously the turnkey provider has to make money, I just am having a hard time getting past that. While you do obviously charge a fee for your services as you should, it sounds like you see both sides of the arrangement and do your best to be transparent. I'd love to learn more about what you do if you have time. Everyone else... Holy cow, thank you for all of the feedback and advice. Best of luck to all of you!

    Thanks again,

    Trevor

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  • Adam Gerig
    Investor · Fort Wayne, IN · Member since 2012 · 276 posts · 77 votes
    12y

    @Trevor Lohman exactly!! Transparency is key. I think if you have to question what a particularly fee is then you're not being very transparent and would instantly make me hesitant. If you're charging a $3500 fee for putting a deal together. That's fine call it an acquisition cost or project management fee or something. PM Setup fee??? What the heck is that lol!

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    12y

    Good luck Trevor! I think Adams service is great. I would want team in place ahead of time. You can add a trust but verify method with handyman and video. Also the 50k is a challenging property tax level. Consider some markets will eat up 3 months of rent and others just 15 days.

    Thanks,

    Matt

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