I'm a completely new buyer and this is my first project, I'm either going to own this house or not. The deciding factor is if it is smart, safe, and profitable to own a house that's in a completely different location than I am. By this I mean buying the house, living in it it, flipping it, then moving elsewhere while a tenant is renting it. As you can tell, I'm a total newbie so this is probably one of the most basic questions you've heard and it might have an obvious answer but I'd love to get some advice, thank you!
Generally if you "flip" it means you are selling it to someone else, not that a tenant is still living in the property.
I think @Brenna C. means rehabbing not flipping. The DIY shows seem to use the term interchangeably sometimes. I can't see anything wrong with doing that and it is actually an interesting idea to do the moving around as you are rehabbing properties thing. Brenna there are people from other countries investing all over the US currently and many of them are on BiggerPockets. Many more people here are buying and flipping or renting out properties in multiple states. The biggest issues you will have going forward with your plan are remote property management and taxes from several states potentially. I used to have to file taxes in other states when I was doing computer consulting and it is agitating or expensive and sometimes both depending on if you do them or have a CPA do them.
We own 3 out of state properties :) We have an offer on a house that we will buy, fix up and than rent out. If you have the right systems it is totally doable :) The key is to have your landlording practices in place and ready to go! Another great place to learn about these niches and how people have made it work is their signature. So If you see a post you enjoy check out the persons signature. Many of us including myself talk about our strategies, styles, niches and business model on our website. So definitely check that out as it is an amazing additional resource. For example, my blog is about while working full time, buy and hold investing, 0% Down Rentals, Personal Properties turned rentals, Long distancing investing, self-managing 3,000+ miles away. Definitely list your blog or website in your signature, if you have one. Its a great additional networking source.
Look forward to seeing you around! Let me know if I can help!
Investing in out of state property is suicide UNLESS you are an experienced landlord first and know the score like Elizabeth.
Yes, being a landlord collecting all the dough sounds so enticing. Piece of cake! That's normal for others to think of our Industry this way.
When I would call a repairman to come to my own private home and they see the house I lived in, they asked If I was a doctor or a Lawyer, and I said no, I’m a landlord. And they would say, "You’re just a landlord", so astonished and surprised. "I'd say, yep, I'm just a landlord" and smile to myself, and hear them say, "Wow, I need to check into that", I would smile to myself again and say, "Yea you should". Knowing that they had no clue what it involved.
Being a landlord entails the following:
*Taking a fixer upper and jumping through 100 loops of the building codes and city ordinances before you can rent it out.
*Getting a C of A (Certificate of Acceptance) and a C of O (Certificate of Occupancy)
*Studying the landlord laws of your State and City Ordinances
*Making sure you are located in a rentable neighborhood.
*Making sure your rents are according to the market value of that neighborhood.
*Making sure your rental properties have great curb appeal
*Making sure you have a legal Rental Lease Agreement
*Deciding whether to have your lease agreement as a month to month or annual
**Making sure you have a legal Application form
*Making sure you have a legal Criteria Qualification Policy
*Doing Credit Checks and how much do you charge
*Learning how to read a credit check report
*Learning how to choose Tenants
*Learning how to keep your tenants long term
*Receiving calls all day and night from tenants or your repair men. Especially on Christmas Eve or Thanksgiving. This is when the furnaces always seem to go out.
*Receiving complaints from tenants
*Solving disputes with your tenants and other tenants of the building.
*Learning how to advertise a rental and be within the law. Lots of NO NO Words
*Learning to treat this Industry as a business
*Never love your rental houses - they are tools to your Industry- nothing more
*Get it in your head that this is a business of evictions, damages, law suits, fixing up your rentals over and over again
*Train your Tenants (See my article on TENANT PHASE)
*Sit in an eviction court and learn the ropes.
*Never change the locks on a tenant without their permission
*Never ever change the locks on your rentals during an eviction.
The eviction process is a dangerous and emotional time. If you do it your way, it could mean jail time, a law suit against you and possibly your own life. That is why we have a Bailiff that will throw your tenants out and not you!
You will have tenant's that won't move after their lease expires, and yet you have to go to court to have a Judge say, Yep their lease expired, and then say to the Tenant, why haven't you moved and then give them 10 more days to move out. In the meantime your home has drawn no income for several months due to the tenant not paying rent or moving out.
These are just a few things you need to know.
There are many exceptions. No scenario is the same in this business.
You need to be firm, but fair. Stick to your lease agreement, but be a good listener.
This is an Industry of people management.
If you don't know all these things, how can you pick a good Property Manager?
Most Property Managers are licensed Brokers. It's the law except for about three states.
I have found that most Brokers don't have a clue what's it like to be a landlord because they never have been one. They buy and sell, but being a landlord is far more involved than just buying and selling.
Being a landlord means that WE have money invested in our homes, and they cost hundreds of thousands of dollars. Yet a Brokers Lease Agreement is geared more towards the Tenants then the landlord and I find it appalling.
There are some Brokers I have met that are good, only because they do own their own rentals.
Just some tips.
You may be interested in this article I wrote: Media vs. the Landlord
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