How do you build and find a network of trust for long distance investing?
It has to come with additional risk not being able to see the property first hand as you are relying on an agent/contractor to do the initial cost estimates for rehab.
Does this scare you or how have you overcome this challenge?
Hey @Eric Brenneman -
While it doesn't scare me, it definitely consumes me in the beginning.
Part of what I do for my own clients is help them analyze other markets to invest in that might be more appropriate for their goals and risk levels. To do that, I reach out to a lot of people in that area and I ask a lot of questions. For a small sample:
- real estate agents
- send me the numbers on a recent investment deal you helped a client with
- do you work with many out-of-area clients?
- who are the top property managers you like to work with and why?
- if you need to renovate your own place, what contractor are you going to call?
- property managers
- what type of properties make up the bulk of your mgmt portfolio?
- what areas seem to be attracting the most interest from renters?
- are there any agents that you find yourself working with frequently or that seem to be more investment focused than others?
- do you have any go-to contractors/handymen/inspectors that I could talk to so I can get a better sense for costs, timing and, potentially, common issues to watch out for?
- how much lead time do you need for a new project right now?
- once on site, how quickly could you do a <blank> remodel?
- do you have any agents or property managers that you like and find yourself working with more than others?
This is just a small sampling, but you get the idea ... I do my own research to find these initial people, but I then turn to each of them and ask for recommendations - when the same name starts to popup multiple times, I take notice.
I also make it a point to ask them questions that I already know the answer to or that I have a strong opinion on. It allows me to verify they know what they're talking about and, depending on the question, will give me some insight into their thought process and how they go about conducting business.
When you get to the point of evaluating a specific property, video and google street view become your best friend. When we're personally working with an out of area buyer, we'll shoot a quick video walk-thru of the property and send it over to them with our thoughts and numbers on it. Assuming they're interested, we'll do a video chat with them while walking the property - this way, we can point out any immediate issues we see and they can direct us to show them every nook and cranny that they want to see. When we get into contract and have inspections done, we'll shoot video of the inspector providing a recap of their findings and answering any of our immediate questions. It's never going to be as good as being there in-person, but we feel it's a step in the right direction.
If you're contemplating the Raleigh metro or the SF Bay Area, give me a shout - I'd be happy to help!
@Brian Sparr This is an incredible response and really provide excellent guidance. The more I am educating myself through BiggerPockets and individuals such as you, out of state investing definitely seems possible. The questions you ask are spot on and are valuable as I can begin employing those today as I look to build a network of my core four in different market places.
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