Hi first post here on Bigger Pockets. I’m sorry if this is the wrong sub-forum, I didn’t see a good spot for this question.
I live out of the US for work so I can’t travel back as frequently to view potential properties. How have some of you other remote investors found properties?
When I posted this question on Reddit I got quite a few investors looking to sell me turn key properties. My question is for the investors who buy without seeing the property, how do you know the home is good? Do you just call up local inspectors to tour and send detailed descriptions?
Based on my need to be remote the two options I see are either buying full turnkey or partnering with a house flipper who can rehab.
Any help on the best thing to do for remote investors would be great.
Welcome to BP! There are a number of foreign/expat investors on BP. Normally, non-US based investors will purchase turn key properties or invest as a limited partner/passive investor in a syndication since it is the easiest to do, the system is in place already and the investor has minimal to no responsibilities.
If you are interested in turn key properties, do you know of any investors personally that have invested in them? What area(s) are you interested in? I feel the best way of finding anything is through referrals, especially in real estate.
There are a number of turn key providers on BP that you can speak to and they will have the system in place for you already; a lender, their property management, a CPA etc. Turn key properties, like syndications and everything else, has pros and cons. Normally with turn key properties; you are purchasing a property that is completely renovated, a renter is in place or will be in place, the manager most likely is managing 1,000+ units already in that area etc. The drawback is a lot of the value was already created BEFORE you purchased it which if you read BP, the value creation is where the lion share of the money is made. You will however have a cashflowing asset and you will not have to do anything. Just a couple thoughts for you to consider. Good luck on your journey!
@Jason Lam Welcome to the community, sir! As @Charles Carillo said, there are quite a few overseas investors here that you can talk to, definitely. I have several overseas clients that I work with, but you have to find what works best for YOU based on what your goals and expectations are. Some of them come for personal tours of the properties before purchasing them, and others have done enough business with us that they are satisfied with some photos and videos.
On the other hand, I have some US-based investors that will not only hire their own inspectors, but also call up local police stations, news stations, schools, etc to get a super solid idea of the neighborhood and property before committing. There are a lot of ways you can do your due diligence from afar!
Do a ton of research before signing any papers with anyone, you already know that. Ask hard questions. If they don't have the time to answer them, or if they seem dodgy, go with your gut and find someone else. Do you want to be very involved and hands-on, or do you want to be hands-off and let your investments and who they're with do all the heavy lifting for you? That will help you decide which way to go.
Best of luck!
@Charles Carillo and @Bryan Blankenship
Thanks for the reply. With turnkey I don’t really have a market in mind, just anything where the numbers work.
Ideally I stay in Florida, either Tampa Bay or Kissimmee markets. I have lived in Tampa Bay for many years and have quite a lot of family in the area so it’s a good market.
I do already own a home in the Kissimmee area that is managed by a property manager so I have someone I trust in that area. It may be worth starting in those two markets but I am wondering what’s the best way to branch out to other markets. I don’t know any other real estate investor personally.
Hi @Jason Lam ,
There are quite a few options to buy properties remotely. The good thing is that with the technology that is available today, you can do everything remotely as long as you have a "boots on the ground" person. Like @Charles Carillo mentioned, turn-key operations have their pros and cons. You will get properties that have already been rehabbed or they'll partner with you on the rehab. Like anything, there are good and bad turn-key providers so you will want to do your research. You'll also want to go in knowing that you are paying a premium for someone else to coordinate/do all of the work. That's not necessarily a bad thing, it just depends on whether you feel like that's something that will help you meet your goals.
The way I operate with my remote investors is that I help them find properties on-market that meet their criteria. That way they have the protection of a full inspection period, by the books contracts, etc. I then coordinate the inspectors and request repairs to be made that are needed. If the house needs a rehab, I have contractors that I can put the investors in touch with and help make a punch list. Once the property closes, we then turn over the property management to a property manager that specializes in that area. Overall, it's similar to a turn-key process however you don't have the mark-up of outsourcing all of the work.
@Cassi Justiz I do like your method. I think that’s too much to jump into right away I think I am looking for full turn key for the first couple properties before I take the risk of a full rehab with contractors. I’m sure I’m going to run into some unexpected issues with turn key that will help me when I branch out to rehabs.
This is great question! I am located in NYC but looking to purchase Rental property in Detroit. Any suggestions on how to find great deals?
@Jason Lam don't be scared that you're doing something out of the box! I've seen hundreds of out of state investors add to or start their portfolios in OKC and I'd say 80%+ have never personally seen their properties. But they've had photos and video walkthroughs etc! Turn-key type properties are meant to be convenient and secure so of course, they attract people who don't have time to go to a market themselves! I'd just choose to work with someone who can provide you a lot of information up front on properties so that you're not constantly inquiring on things that interest you and then waiting to hear back.
If you partner with someone on a flip, I'd just make sure that you're paying the contractor directly and then paying a project manager. I've heard the horror stories of paying a partner and them telling you that work is being done when it's not. Set up a scope of work with budget and timeline and then just pay someone to check on the contractor actually following those guidelines!
@Kiera Underwood what are some red flags I should look out for when buying sight unseen and only using videos/photos?
Look to see if they have warranties in place to cover the renovations they have completed on the property. This is a good way for turnkey companies to hold themselves accountable for their work. If they do not cover any of the items on the scopes of work completed, then it could mean the company does not focus on quality.
I did not go out to Birmingham, Atlanta, Indianapolis, from living in Seattle until I have a few properties. The key is finding the right people to work with which might not be turn key providers but property managers first. Let me know if you have other questions.
Hey Jason, welcome to Biggerpockets!
I'm personally an out of country investor, from Calgary Alberta Canada. How we go about reviewing properties that we cannot personally walk, is done with our teams we have setup in the market we invest in. Between wholesalers to find us properties, general contractors to give SOW, property management companies to review neighborhood location and ARV, as well as projected rents, and home inspectors to review the property for us.
Our first steps (Assuming we have teams already established) is to review the subject property with our property management company. If they like the neighborhood, and can confirm the rent quote given to us by our wholesaler, we place an offer to get it under contract. This step is also very important, as you can really see true colors of the wholesaler you're working with and if they are providing you with accurate information. If we find repetitive errors, they are red flags telling you not to work with that wholesaler.
Once we are getting it under contract, we ensure we can opt out of the property by placing a contingency on the inspection report and SOW that will be pulled by our contractor and home inspector. This allows us to walk from the deal if our findings does not come back the way we want it to.
Now that it's under contract, we get our home inspector to go in immediately (Giving him warning that you may have a home needing inspection before hand is great) as well as getting our contractor to walk the property and draw up a SOW.
*Pro tip - if you are able to walk the property before getting it under contract, line up and meet your property management company and general contractor at the home with you, to review and walk the property - this gives you a better idea of the home, and rough numbers, as well as giving your management company a better idea for the quality of rehab and better communication in general to further help with qualifying rents..etc.
After you have all the information, purchase price + rehab, compared to monthly rent minus expenses, you can see where you stand realistically. At this point in time, i always assume that these numbers are best case scenarios, and i will most likely be just under the returns i've just calculated +/- 10-15%. After considering everything, if the deal still looks great, and i know the ARV for refinancing possibilities, than i close the deal and begin rehabbing.
My actual process is very similar to this, depending on the situation. Personally, we work with a large personal network of investors and connect them to our teams we use in the markets we invest in. By doing so, we increase the volume of work for our teams, and straighten our relationships with the companies we use - further increasing our personal security through great contacts, and pass the benefit onto our investors. Through this, we have been able to scale into multiple markets including Dayton, Memphis, Montgomery, Toledo - and expanding to Indianapolis, Cincinnati, Chicago, and Cleveland.
Feel free to personally reach out to me and continue the conversation! I love networking, and talking anything real estate related.
Best of luck!
@Jason Lam recent photos are key. You don't want to only see photos that were taken when the property was marketed to be rented. Often a teammate is going to have trouble entering a property if it's leased, but at the very least you should be able to get new photos when the inspections happen. Really all you're doing with these photos are making sure there's not tons of damage. I'd ask the team mate to take a decent amount and to especially document any areas of damage. A decent amount of damage is nothing to be afraid of.. after all if it's a good deal and hasn't been flipped, doing a solid make ready when tenants move out is to be expected.. but you just want to make sure the property isn't at a point that exceeds what you'd expect to do to make it "make ready" if you've got excessively damaged floors, holes in walls, doors off the hinges, broken windows.. that doesn't mean it's not a deal, but it does mean you might want to negotiate the seller taking care of those cosmetic items when normally you'd only ask for mechanical. Or, if fixing those items still makes the property a deal, at least you know what's in store instead of it being a surprise!
The real thing you'll want to look at is the inspection report. I'd ALWAYS suggest scoping the lines especially if there is no tenant to tell you if they've been backing up or not. HVAC and hot water tank you can replace with 3k and they'll last you 15 years.. a broken line can cost 10K and is a reason to walk from a property or demand the repair before close.
Hey @Jason Lam Welcome to BP. Your question was one of my biggest fears when deciding to buy out of state! I mean at first it sounds crazy, why am I buying a house that I have never seen and don't plan on visiting anytime soon? My parents kept giving me these weird looks!
I eventually bought an investment property in Memphis. As my first investment property, I decided to go with a turn key provider for the reasons that @Charles Carillo mentioned - the entire system, including property manager was in place. This helped calm my fears about out of state investing. I was willing to trade some return on investment for convenience and peace of mind.
What convinced me to go forward was doing due diligence on my turn key provider. If you go with a turn key provider it's almost like you have to trust (and verify) them more than the home you're buying. The turn key provider I used sent a detailed home inspection report with photos, so I could know what I was getting.
You could also try companies like We Go Look for an independent look. Good luck!
@Tim Harwick thanks for the info. How did you do due diligence on the turnkey provider? What questions did you ask? Did you get references for other investors?
If you are concerned primarily with the quality of the home, then first thing you should do is make sure you are working with a reputable turnkey company. Get a 3rd party inspector. Any big issues that come back, you can always negotiate with the seller. Also, get a 3rd party appraisal to make sure you aren't over-paying. I bought turnkeys sight unseen as well and they have been great investments so far. Technology has made doing DD much easier nowadays.
@Jonathan Oh thanks. My biggest fear is I’m relatively new to this so I have no idea what I’m doing when it comes to psychical inspections and all the things to look out for. I can run numbers to find potential deals but after that when it comes to inspection it’s out of my realm.
You just have to look for transparency. Disclaimer: We're a very successful TK company in Indy. We actually do TWO 3rd party inspections... the first one is when we acquire the property... we want our rehab teams to see that, and make sure that they are addressing all of the issues. The second one is when the rehab is done... we want to make sure we didn't miss anything (we put a warranty on the product), and more importantly, we want the investor to know the exact condition of the property they're buying. We show all contracts up front, research all the taxes, get an actual insurance quote, show scope of repairs, before/after pics, etc, etc. Essentially, we make it pretty easy for someone who can't come see us to have all of the information they need to make an intelligent decision. As such, we have plenty of overseas investors.
Be very careful of “Deals” that people are trying to sell you.
The challenge with you being non-local to an area is you are 2 dimensional and only as good as your team on the ground.
I recommend before you buy anything make sure you know what your end goals are for the reason you are investing once you know what your end goal is then you create a strategy to achieve that goal.
Once you know the strategy then you find the properties that fit.
Once you know what a “deal” is to you and you know your business plan... then you find the team that aligns with you and your business model.
We work with a lot of investors, of the 1,000 properties we manage 50-60% are out of state / out of country investors. The key to making this work in my opinion and why we are so successful is we make sure the investor’s goals and strategy are aligned with our’s.
Once we know what your goal and strategy are then we can easily identify what deals match.
Make sure you do this, ask for a strategy session before you do anything is my belief... good luck
@Steve Rozenberg can you point me toward any resource to help build a strategy? I think I have a one but I could be completely wrong and it may not be realistic.
End goal: live a lean lifestyle solely on passive income and continue to use my active earned income to grow passive income.
Path to get there: buy 1-2 properties a year for the next 5 years. One that is complete I’ll reevaluate where I’m at and decide on the next steps but overall it’s going to be grow passive income.
I am not looking for an active income stream so house flipping is not on the road map. I’m looking for turnkey to begin with then maybe get into light rehabbing to turn the rentals into a higher cash flow property.
I would suggest you make SMART goals out of it and you need to quantify what specifically does that mean. “Lean lifestyle”...”1-2 Properties “... that really does not mean anything till you attach numbers, returns and most importantly an end date and exit strategy.
The more specific and fine tuned... the easier it is to find that deal and achieve that goal
Hi Jason Lam, welcome to BP (I'm new here too). In this day and age being remote doesn't mean you can't see or even walk through a property you're interested in. Everyone has a smart phone and there are plenty of ways to connect face to face or face to property in real time. Time difference (depending on where you are outside the US) can be overcome by creative scheduling.
I'm a Realtor and also investor/flipper/landlord and I feel confident I could made a qualified purchasing decision on a property if I had someone via smartphone allow me to walk through, see details, drive through the neighborhood and provide me with any additional data needed.
@Steve Rozenberg sorry yes I have those. My plan is to generate $2500 in cash flow/mo. I will save the majority of my active income and continue to invest in rental properties. I expect this to take roughly 5 years doing 1-2 properties per year. Once I hit that goal I may want to ease off the gas a little and reevaluate a new strategy.
@Jason Lam you might want to consider pairing up with a local investor who is BRRR-ing or flipping. Most turnkey providers profit from the mark-up that you pay for, but at least you're getting a property void of all deferred maintenance for a few years...
i'd start by choosing the city you want to invest in, then scour bigger pockets for people involved in that area. If you can do a JV deal with someone locally, then presumably there's still some meat on the bone at the end for everyone.
@Patrick Britton that is an ideal strategy but the actual rehab/inspection part is what I know the least about. Can you point me toward a resource to learn what to look out for? I can’t find a partner without know what makes a good partner.