Real Estate Agent · Hayward · Member since 2019 · 25 posts · 11 votes
Happy Friday to everyone on BP. Since I'm looking at buying OOS the best way for me to view the property to make judgments on it is through a realtor taking video of the property and sending it to me. My question is how do I make an accurate summary of repairs based off that? Will I have to do my best looking at everything, make my estimate on repairs, make an offer, then hope the inspection aligns with my estimate? This so far has been the most confusing part me. Any advise on this process would be greatly appreciated.
@Anthony Van Gilder There are a ton of very smart and successful investors in the forums with opinions on OOS investing. I invest both local to me (California) as well as OOS (Dayton and Huntsville). I think I have an equal number of people telling me I can't cash flow in California as I have telling me I have to be local. Either one can be very successful. Here are a couple keys to success.
#1 - pick something, focus on it, execute and do it #2 - if you go OOS, research areas and pick 2 to 4 areas based on your goals and criteria. Then try to make contacts (PM, agents, wholesalers and contractors) - wherever you get the most traction - make that your area and focus on it. #3 - read @David Greene book on Long Distance Investing #4 - have sufficient reserves (9 months of PITI and Utilities and 20% of your rehab bid) - everything will take longer and cost more than you estimate. It will get better with time, but if you don't have the reserves - you will be sunk.
I don't know a single person who failed at real estate because they chose the wrong market! Not one. Failure typically comes from either a lack of $ reserves, a poor performing/dishonest team or a lack of ability to communicate with and manage a team. Or worse yet, the trifecta of all 3.
Lastly, once you pick your market- spend at least 5X that time on choosing your neighborhood, street, block and house. Team and market specific location are WAY more important than market selection.
If this all sounds too complicated, focus on finding a great turnkey provider and go that route. There are plenty of paths to success if that is what you want to do.
Hi @Anthony Van Gilder - you're on the right track ... it should be the combination of what you see in the video along with what your agent notices/recommends. It's by no means ideal, but another example of how important your local agent/team are to the process. If you're the only one putting this repair list together, you're working with the wrong agent.
As we shoot these videos for our own out-of-state clients, we try to highlight any immediate concerns and, when time permits before making an offer, will try and get an estimate from one of the contractors that we work with.
@Anthony Van Gilder, this sounds like a bad idea unless you have a partner or are from the area and have tons of contacts. There's no way an agent with a video cam is going to be able to give you information you would otherwise get from physically walking the property. (maybe if they're with a turnkey company or something) Plus, sticking inspection contingencies in your offer only makes your offer weaker. Perhaps if you had a super trusted contractor to walk and tell you what it needs, but man, trying to do an out-of-state rehab strikes me as really risky.
Agree 100% with what @Brian Sparr, When I view property for OOS investors getting video and noting what needs repairs is crucial. You want to have long and detailed conversations with the agent about the property. Along with the agent walking it with a contractor. I would always have the inspection contingency especially for the first properties you buy. You always want to verify any info pertaining to the property. Also stay away from scam artist and people wanting to sell you "junk".
@Anthony Van Gilder - I don't know about Huntsville and Clarksville, but if you want to connect with another local Indy investor, I'd suggest attending one of the Thrive REI meetups generally held in Walnut Creek ... Beau Eckstein, who runs it, is doing a bunch in the Indy market.
The key is having a team member you can trust to give you quality information. I would recommend staying in areas you know and close to home. If you do go out of state, you should definitely travel to the cities you are thinking about investing in to really get to know them and meet good team members.
I guess the answer to your question would be to make sure this realtor is someone you trust and understands what you do. Based on the video/agent feedback, you can put together a repair budget and make sure you have extra money in there for unexpected costs because there are almost always unexpected costs. You could also have the agent show the property to a reputable contractor to get an idea. Lastly, you can make an offer based on your repairs, have an inspection contingency, and physically fly out to look at the property with an inspector to make sure everything checks out. You have to ask yourself if a couple hundred dollars on a flight is worth potentially saving yourself thousands of dollars in the future. If there's a lot more wrong than what's on the surface, you can always renegotiate price or back out.
If you do not have boots on the ground who you can trust, you would be gambling, not investing. Your best bet is to partner with a local investor who has skin in the game.
@Brian Sparr I'm looking at a few different ones, Huntsville AL, Clarksville TN, and Indianapolis IN. I'm always doing research on new areas though.
If you are interested in investing OOS in Huntsville and Clarksville then I would definitely check out Brian Ellwood (podcast, FB group, mastermind group, etc.). Those are the places he currently invests in and he shares his contacts in his mastermind coaching calls for investors interested in Huntsville & Clarksville. Personally, I drove down to Indianapolis to meet with a local 'boots on the ground' investor and that is making all of the difference in my progress of formulating my team. Seems like 'boots on the ground' can come in many shapes and sizes (property management team, project manager, general contractor, local investor, etc.).
@Anthony Van Gilder There are a ton of very smart and successful investors in the forums with opinions on OOS investing. I invest both local to me (California) as well as OOS (Dayton and Huntsville). I think I have an equal number of people telling me I can't cash flow in California as I have telling me I have to be local. Either one can be very successful. Here are a couple keys to success.
#1 - pick something, focus on it, execute and do it #2 - if you go OOS, research areas and pick 2 to 4 areas based on your goals and criteria. Then try to make contacts (PM, agents, wholesalers and contractors) - wherever you get the most traction - make that your area and focus on it. #3 - read @David Greene book on Long Distance Investing #4 - have sufficient reserves (9 months of PITI and Utilities and 20% of your rehab bid) - everything will take longer and cost more than you estimate. It will get better with time, but if you don't have the reserves - you will be sunk.
I don't know a single person who failed at real estate because they chose the wrong market! Not one. Failure typically comes from either a lack of $ reserves, a poor performing/dishonest team or a lack of ability to communicate with and manage a team. Or worse yet, the trifecta of all 3.
Lastly, once you pick your market- spend at least 5X that time on choosing your neighborhood, street, block and house. Team and market specific location are WAY more important than market selection.
If this all sounds too complicated, focus on finding a great turnkey provider and go that route. There are plenty of paths to success if that is what you want to do.
I’m a realtor, and I have a pretty simple work around for this. A simple FaceTime call during a showing can add a personalized touch that a video uploaded by the listing agent can’t. PM me if you’d like to chat more about this!
I am a realtor and I would recommend to my buyer client to make an offer upon a due diligence contingency. The buyer can have the home inspection and general contractor to give the estimate feedback and condition of the property. From there you can work with your numbers and see if it would be a great fit or opportunity.
Looking to do investments in the near future as well.
@Anthony Van Gilder You probably want to recruit a property manager at this point and get them involved with the viewing, so that they act as a second eye.
If the numbers work and the initial assessment from the broker, pictures etc makes sense, make the offer with a inspection contingency. then find a inspector who works with investors and have them inspect the property through the eyes of a investor. They should be able to give a good tell on the real condition of the property. I wouldn't rely on what a broker or contractor reports back. To much possible conflicts of interest. If your new to investing I would certainly get on a plane and tour a few properties in order to get a feel for the conditions of these properties. A inspection contingency does not weaken your offer. Any OOS investor that passes on a inspection is looking for trouble unless they have trusted, seasoned partners.
I'm an avid out of state investor and everyone has their own methods but I personally walk every property I buy and study all of my areas thoroughly with my personal boots on ground. I have an amazing team in each of my market but I still trust no one. It's a write off and makes for a nice weekend in another state. Lol
@Anthony Vangilder Anthony, there are realtors and companies out there who will handle the renovation/turn for you AND make recommendations based off of what they are seeing in the market. Find that company and you’ll be golden.
If your realtor does rehabs, he’ll be able to give you a rough estimate of what things will cost in his market.
A home inspection is some of the best money you can spend as an OOS investor. You can renegotiate price based on it, and hand it to a contractor to complete your ‘make ready.’
To start off, I’d really recommend buying as close to rent ready as possible. Something with minor repairs a handyman can fix
1. You should use your realtors POV(they should attempt to attend all of their inspections)
2. Develop an initial SOW from the video.
3. Spend the few hundred and get an inspection, even if paying cash. Use the report to add to the SOW.
4. Get a minimum of 3 estimates from contractors and tell them you want them to quote stuff you've missed. Make sure you tell them what your plan is with the property (flip or sell). The good ones will do this and the mediocre ones will only quote items you've put in the SOW. Get everything itemized.
I highly recommend reading David Greene's book "Long Distance Real Estate Investing". Everything is systematized and I'd followed you will be successful.
You can submit a letter of intent (LOI) without even looking at the units, but definitely do a physical walk with a contractor and property manager before you submit your final offer.
@Anthony Vangilder you live in Hayward. Opportunity is right in front of you. No where else in the Bay Area offers as much upside as Hayward due to its location and affordability.
Don’t be penny wise and pound foolish. Your backyard offers unlimited opportunity.
I think you need to pick a market, then find an agent and a PM who work with investors. They should help you identify target neighborhoods with specific property characteristics in mind. THEN, you can focus on how to estimate rehab costs and make offers. (I'm right at this stage now). Basically, do what @Dave DeMarinis said.
I have yet to make this process work to fruition, but this is my plan: When you're ready to make offers and you have identified a potential deal, have your agent and/or PM walk the property taking video and then taking pictures (you must train them on how to do this effectively). Review video & pictures, see if the numbers might work including margin. Then, make an offer with an inspection contingency. Then, send an inspector (my PM says it can take a week to get an inspector out there). Refine the rehab estimate. Then, send a SOW to a contractor for a bid (My PM said he'll help with this). Adjust for margin and move forward with the deal if it's still good. Even if you don't get the property, you probably should pay any team member who didn't get paid during this process. Pretty much what @Chris Virgil-Stone said.
This process makes it pretty difficult to get wholesale deals, but that's a price to pay for this investment type.
Have to agree with Chris, read Long Distance Real Estate investing first. When I invest out of state I make sure that the core members of my team, my agent, property manager, and contractor, have all been inside and given me their opinion on 1) quality of the location, 2) rehab estimate, 3) estimated rent post rehab, 4) after rehab value of the home so that I have an idea of what I can take out of the house when refinancing under a BRRRR framework. I also come up with my own opinion of these prior to even asking my team to look at the house to make sure it's worth our time to do deeper work on the property.
A couple of people that have had great success at OOS investing told me that if you don’t want to spend $1,000 on a trip to eyeball a place yourself you are asking for trouble. It took me flying out to Cleveland a couple of times before I started investing there.
@Anthony Vangilder How many flips , wholesale or brrrr have you done ? If you’re new to the game , listen to me . Stay in your own backyard. Your literal backyard. You need to have some dirt stained fingernails before you jump out of state cold turkey . Or you will wish you never had.
I’m a realist , not an optimist.
You need factual numbers from credible people. Build a relationship with an agent. Find out who’s in the multi millionaire sales club , ask them for a couple of referrals for contractors . Find recently sold homes on the mls and contact the selling or buying agent to find out who did the work. Say you’re moving to the area and saw the remodel and would like to know who did the work. Then call the new buyers , and say , “Hey I saw your house and thought it was gorgeous and tried to make an offer and found out it was sold. Ask if they loved the work that was done . Say it’s do hard not knowing anyone in town and you’d appreciate the contractors name. “ You get the picture right? OOS is risky , so watch out.
@Anthony Vangilder you really need a buyers agent you can trust who will give you an honest opinion on the ground. There are numerous times as an OOS investor that I have seen a property online and thought it was a good deal or a good property when in fact it would have been a nightmare. Thankfully my agent saved me numerous times from learning this the hard way . I don’t know about others but I know finding someone you can trust is worth its weight in gold when it comes to investing out of state . Take your time and build those relationships . There will always be more properties .
@Anthony Van Gilder - OOS isn't easy at all but if thats what you want to do then at minimum you personally visit the property and see for yourself. If you're not familiar with repairs bring someone with you that is. You need to check it out for yourself. Its great that you trust your realtor and the video thing helps a lot but when a problem occurs you will tell yourself "I should have went to property".