Is long distance investing difficult?
Casa Grande, AZ · Member since 2020 · 17 posts · 34 votes
Is long distance investing difficult?
Most Popular Reply
Rental Property Investor · Phoenix, AZ · Member since 2020 · 7 posts · 14 votes
5yHey Jovann,
Its funny, because I live in Phoenix as well and found myself asking the same question about a week ago.
Things I would consider:
The market is getting a little pricey in the valley however I don't think it is going to slow down soon. So appreciation would still be a benefit of getting a property in Phoenix.
Another factor that you may want to consider is the return that you are looking for? Cash flow vs buy and hold.
Alone, 15k will probably get you a property that could benefit from renovations, something you could live in and fix up.
Also consider when looking in another market that you will need a team/network to help.
I was recommended to read David Greenes book on Long Distance Investing.
Feel free to message me if you have any other questions or would like to chat. Hope this was helpful!
98 Replies
- Realtor · Jacksonville, FL · Member since 2019 · 95 posts · 87 votes5y
Happy Friday to you! I agree with reading Long Distance Investing by David Greene. I would network in the area to find your main crew you can trust. Vet them out by asking other investors in the local area their thoughts on them and their work. If possible I would fly out to spend a few days in town. The main people you are looking for includes an investor friendly realtor, GC/subs, property manager, and a lender. Having a reliable lower cost handyman for later would be great as well if you plan to buy and hold. With the internet and technology today there is no reason why people should not invest out of state if they want to. I hope this helps give you a start!
- 5yRobert D DismukesPro MemberFlipper/Rehabber · Memphis, TN · Member since 2019 · 37 posts · 36 votes
@Jovann Thompson save your money kid. I am in Memphis and 15k will get you a house that needs 30k work to get 600 a month rent. Arizona is a better market than Memphis. Stick closer to home. Build a team there. If you do it , do it right. If you don’t , you will fail.
- Investor · Canada · Member since 2017 · 40 posts · 32 votes5y
I currently own rentals in two countries, three provinces and one state. When I started five years ago I was in a similar scenario which will make it easy to speak on my experience.
I would recommend starting with a house-hack, IMO it's the stepping stone to real estate. The initial investment is extremely low, 5% down in Canada, 3.5% down or less in the US. You will have more flexible lending options, such as adding purchase plus improvements to your loan. Which will provide you with the capital to fix up the property, as the capital is an addition to the mortgage. Post completion, due to the small initial investment (down payment), being able to refinance out your capital, should be fairly achievable vs someone who is trying to refinance out a downpayment of 20%-30%.
I'm not sure how it works in the US, up here in Canada, we can utilize 5% once per year, and each year I do, the ROI is very hard to beat. I've used the same funds from my first house-hack, and continue recycling (BRRRR) them each year to buy another, and another, etc, while I continue growing my rental portfolio out of province/state.
House-hacking is a great learning experience, I would recommend buying a fixer-upper, that way you can understand renovations, hiring and managing contractors. You'll learn timeframes, and costs for specific items, you will learn how to deal with tenants, bookkeeping, etc. House-hacking will also reduce your living expenses, thus allowing you to save more capital for your next investment.
Once ready to take the leap to invest out of your own back yard. I would recommend doing a great deal of research on several markets/cities, which is a whole blog post on its own. I will assume you've done so, as you've mentioned Memphis. I start by taking a flight to the new market, living in Airbnb's near the areas I wish to invest in, to get a feel of the area. I'll spend two full days at Tim Hortons/Starbucks, where I've scheduled meetings with realtors, property managers, contractors, mortgage brokers, etc. to come through and meet with (subliminally interview), and begin to build my team. While in town, I'd also recommend visiting any RE meetups and building a network of local investors.
I find that many people say they don't invest out of province/state because they want to be nearby in case something bad happens. I've always responded that if something bad does happen, such as a pipe burst, etc. I would just get in the way, I would rather an have experienced crew/team handle the situation. If a tenant is not paying rent, there isn't much more I can do than the property manager except drive by the house and get pissed off lol.
With REI, you're in it for the long hall, every part of your business should be built from the start with scale in mind. Build a solid team that you can rely on, and learn to manage issues effectively from a distance as your time is more valuable being spent on hirer return tasks such as increasing your income, raising money and finding deals.
- 5yJohn StreetBusiness MemberRealtor · Birmingham, AL · Member since 2018 · 26 posts · 22 votes
@Jovann Thompson The key to long distance investing is building a good team in the market you are considering.
Finding a good realtor, contractors, lending etc will give you a lot more confidence to invest in another market.
- Contractor · Webster, TX · Member since 2016 · 94 posts · 75 votes5y
Long distance investing is easy... as long as you're okay losing money.
- 5yKyle MccawBusiness MemberProperty Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
you can invest at a distance but you need to really have a local manager that you trust. do your research. too many people get taken advantage of.
McCaw Property Management4.4905 Reviews - Real Estate Broker · Cincinnati, OH · Member since 2019 · 7 posts · 6 votes5y
Cincinnati prices are so much less expensive than many markets so we get a lot of far-away buyers.
I believe it's important to have a team in the area who can help you find, rehab, and manage for you. I view our role as consultants looking at the broader picture.
I deal with lots of people who find a Realtor who will find them properties, but then they don't have someone to do the renovation and management. Realtors are good at finding properties and not always as good at the other parts. Some realtors don't have great understanding of investment real estate. I get calls from people who say "my agent said I can get $1600 a month" and then when they find the real income is $1100 to $1200, their deal does not work the same.
One client I worked with found a nice house and her "contractor" said she needed a new electric panel and a new air-conditioner and quoted her prices about double what I pay. In fact both were fine and did not require replacement. The quotes totaled $10K for work she didn't need done.One client bought a 3 bedroom and renovated it making it a 2 BR - they made the 3rd BR into a large bath, a laundry, and a tiny bonus room. They thought it would rent for $1600 and I don't see a 2 BR renting for that much. They also had the contractor under bid the job and then after getting paid $30,000 they disappeared leaving $20,000 in work still to do. The contractor bought the cheapest cabinets Home Depot sells and butchered the counters -- and this was supposed to be a $260,000 ARV.
We came in and finished the job.
It's also important to learn the local market and laws. City of Cincinnati has terrible laws about Lease-Option and Land Contract sales. I have a remote client who got involved with a program to sell on seller financing and then learned that what they planned to do would not work if they want to follow the law. It has really impacted their plans.
- Accountant · TN · Member since 2020 · 23 posts · 19 votes5y
I'm in Knoxville, TN and I'm having the "Grass is greener" fears and considering investing elsewhere, too. I think our real estate is stable and steadily climbing here, but it is influenced neighborhood by neighborhood, with some sections of town being overvalued in general. Memphis is more like "this is a good street, this one is a rough street." Chattanooga is more affordable than Knoxville. This is where I'm looking because I'm frustrated here in Knoxville. My college age son is paying $1,400/mo (with roommates) for a dumpy little house in a bad neighborhood near the airport that is not worth it! Call Shemika Copeland of ERA real estate if you want to get on her mailing list of properties that fit your goals. I'm doing this and one day I'm going to pounce on one. The college kids around UTC are open to living in not as desirable areas, compared to the UTK kids that want granite countertops in their apartments.
One more consideration, Tennessee does not have state income tax but our sales tax is 9.75%. Live cheap while you can and best of luck to you!
- Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes5y
Started with 11 turnkeys in Birmingham, Atlanta, Indianapolis in 2015.
Then I went to 4200 rentals out of state. It can be done. Reach out if you have specific ?s
- Investor · Atlanta · Member since 2018 · 65 posts · 68 votes5y
Do you have any friends or family you trust that you can go in with? I feel like $15K is cool, but $30K is even better!
I'll be honest, there's so much you need to be able to go over there and SEE and DO that you might want to hold off on getting an OOO property until you get more connections and experience under your belt. Are there no cheaper areas in Arizona just outside of the metro area you can look into? - Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes5y
Originally posted by @Jovann Thompson:
I’m 20 years old and live in Arizona but I was looking at a cheaper markets to invest in like Memphis Tennessee. I’m seeking advice on should I try to get a primary residence here in Az or a rental property in a cheaper market? I have about 15k to invest
House hack first with a primary residence.
Learn the basics of landlording/fixing some things/etc.
Take that experience to help understand and evaluate what other people are doing. If you don't have at least some background or understanding of these areas it's going to be hard for you to judge how good managers/other professionals are doing for you. Just my two cents - 5yKerry Noble JrPro MemberInvestor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
i have 2 main partners....one out of country and one a couple time zones away....its possible
- 5yCalvin OzanickBusiness MemberProperty Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
I work with quite a few long distance REIs like yourself and they all have loved the returns from the Rock County, Wisconsin market. One thing they became comfortable with early on was our team and placing trust in our team. For yourself to succeed, you need to find boots on the ground who can work as an extension of yourself. That team includes, but is not limited to, a property manager, real estate agent, insurance agent, mortgage broker and a CPA.
One thing that has stood out to our clients and has only grown in recent years was how strong this market is. Our clients invest in Janesville and Beloit for the most part. They have seen excellent returns and a relatively low cost of entry. We have afforded our clients the ability to invest in these areas with high quality management. We have seen immense economic growth in the last 2 years with the opening of Amazon, along with the growth of companies like ABC Supply Co, Dollar General, Shine Medical and Mercy Health. This has created a robust rental market with well under 2% vacancy in the area.
Wisconsin Property Managers4.7413 Reviews - Member since 2020 · 1 post · 0 votes5y
I moved back to Memphis from Phx last year in order to be closer to family and invest. Wish I would've bought out there when I moved in 2015 for the military. That would've been my first rental. Houses have rose 7-8% a year there. Not so much here. I plan on buying something in either whitehaven or east memphis and eventually brrrring.
- Rental Property Investor · Florida & Shanghai · Member since 2017 · 192 posts · 68 votes5y
has anyone here tried Latchel or related services? They claim to be a service dedicated to emergency and traditional maintenance services for remote owners. When I contacted them directly however, their 'enterprise' rep said they only handle 75 units and above. Are there remote management services available for smaller remote portfolio owners?
- Member since 2020 · 5 posts · 8 votes5y
I find that OOS investing is only profitable if you are able to find boots on the ground team that you can trust in each area you invest. It is absolutely imperative that before looking for properties you invest time and resources into finding the people that will be able to help you secure the right property, do any needed quality renovations, and ensure that you are able to get the highest quality tenants possible to minimize risk and depreciation.
- Investor · Highland Park , NJ · Member since 2014 · 80 posts · 13 votes4y
Who do you use as a realtor for Dayton?If you don't mind me asking.
Quote from @Chris Niemeyer:
@Jovann Thompson
First off, major congrats for getting started so young! You're asking the right questions and you'll be so far ahead by starting this young. I tell all my coaching clients I wished I would have started decades sooner.
#1, I agree with so many others here and recommend househacking in Arizona if you can. You're $15K will go farther as you'll need to put a lot less down as the first time home buyer. House hack away if you can. You'll likely get the benefit of appreciation, living cheaply, depreciation and eventually cash flow. Consider using that equity later as your personal bank to leverage and buy into other properties.
#2, out of state investing is definitely doable. I used to live in a higher cost area so began investing out of state with a trusted team. I currently have 12 doors in the Dayton, Ohio market, and I'm under contract for two more. Establish a relationship with a quality team, ideally turnkey. Or, if you have friends or family in an area reach out and ask for resources and relationships through them.
Best wishes and welcome to chat more if I can help in any way.
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