Investing from overseas - too crazy and difficult?

Question

I own a three family in Boston that's doing well and was turned over to PM about 8 months ago when I moved to Australia for my husband's job.  We'll be returning to the US in a couple of years (most likely) but don't know where.

I want to buy more property in the US and have made a connection here in Melbourne with an investor that owns several SFH's in the Dallas area and knows a great agent and PM.

I'm considering buying SFH's in the Dallas area, partly because I feel like the return seems better there, TX is more landlord friendly than Boston, and I can use this person's contacts rather than start from scratch.

I plan on spending about a month in the DFW area getting to know the market and networking.  Is that enough time to find a deal?  If I can't find a deal in a month, is it too trusting to try and do from Australia?  I've always been very hands on before and it seems crazy to try and do it remotely but I see that other people do, so advice would be greatly appreciated.  If I wanted to do renovations, how do I handle that remotely?  Or do I just plan on staying a few months, or making more trips back (although that's very expensive)?  Or am I getting in over my head and I should just hold off until I make it back to the states?

Account Closed · Answer

I'd be really, really careful.  In my area I'm seeing plenty of props being marked up and sold as turn-key to out of area buyers.  The sellers are profiting on the sale, the management and the mark up on repairs.  They are definitely selling "rent appeal".  I don't know how they could be getting top rents in some of these areas.

I agree with Aaron about finding something with less risk of losing value over finding a great cash flow play.  At least until you get back in the States.  Something with newer construction and something in an area with jobs and desirable schools.  Easier said than done, but it can be done.

Rich Weese · Answer

Of course you can be successful from off shore. Uwe from Germany and Vikram from India/AZ are 2 here on BP. It has amazed me how much they do from off shore! There are also others from off shore that don't do well. This is no different than locals-some succeed and some don't.
    Anywhere you invest it is paramount you have a complete team and tremendous knowledge backing you up. It then becomes something that can be almost on auto pilot and passive income starts rolling in. Good luck Rich

Jerry Puckett · Answer

Nancy Capron,

I've wholesaled to several out of state buyers, but never out of country buyers...I don't know how much different it would actually be....

But the key element these buyers share is a kick ass property management company, and boots on the ground here they can trust. When you come to DFW, I'd be happy to meet with you, clue you in to some great areas, and introduce you to some good folks. DFW is a GREAT place to invest.

Marcin G. · Answer

I tell you what sucks …termite damage, structure problems, leaking roof, plumbing problems (in the walls – Hoa responsibility), leaking boiler, burnt furnace, cracks in the walls due to house settling  and many other house relates problems, that’s what make your PnL go upside down when you lease house. Not saying it all happens at once ...just possible risks.  Condos are very popular in big cities .. yes u pay HOA …but it works like an insurance ..provided nothing goes wrong inside ur apartment …u sleep well .. tenants call you ..pipes are backed up …”call HOA I am out of town, bye” and I am AMAZED how easy it is so far…all I do is collect rent …yes it’s my 2nd year of operation but so far no problems at all. Yes special assessment might come ….thing might get ugly with HOA that steals $$$ …so far goody gumdrops . I have my house “professionally” managed in Austin, TX. So far no problems as well ..but it’s a ticking bomb .. long term this solution does not work for me..they stopped stealing once I told them I will document the case on the website and give them negative review on google maps …seems to work so far 
 as far as your concerns - let me break it down for u:

, maintenance, repairs – myself, I have an office job 9-5. I am happy if I need to fix something ;-)
, eviction – 3X rent or good credit so far no problems, 
Nonpayers ?
, license fees ?, 
Insurance 150 a year ;-), 
utilities when vacant ?? heat is included in the rent, power is thru Comed …which never switches it off back on when my tenants take their name off the bill ..they just keep providing ;-)) for next 3-4 months. I know seems crazy but this is hiow it works, gas is included in hoa so is water ...feeling a little jealous now ? ;-)
, fines ???
, rental agent commissions – craigslit + I am an agent myself, 
attorney fees - so far did not needed. an apple a day keeps an attorney away ;-)))

Scott W. · Answer

Marcin G   - it is bad when your HOA/taxes alone (i'm not even including your insurance here) is 40% of your rent. You've got 10% for vacancies, maintenance, repairs, eviction, nonpayers, license fees, insurance, utilities when vacant, fines, rental agent commissions, attorney fees, etc.

Believe me, I know - I "inherited" a condo - it sucks.

stay away from HOA's.

Marcin G. · Answer

What you plan to do will work however :

As already stated, you need to have a good management company + you need a well established area with ppl, with above the average property values. this will bring  “quality of tenants”, tenants with better credit, with higher income, less turnover, less headache. I live in Chicago and have my rental 3br/2ba  house managed in Austin, TX...which is probably one of the best markets in the US. since then I picked up 4 investment condos in chicago ..no stress at all so far. 
1 condo in the area I target: ~50K purchase price 800 rent, 200 HOA 1500 taxes. not bad at all ..

Mike Jakobczak · Answer

Most of my properties that I own are all overseas or in different parts of countries from which I am located.  Investing overseas is a lot different from buying in your back yards and is not for everyone.  Building a successful system and team is key.

A lot of prep goes into an area before buying.  Learning the markets, and building your team takes time and patience.  Usually takes me a few months before I start buying in a new area.

Nancy C. · Answer

Jilliene H.:  No, I haven't considered it because I'm not that familiar with it.  I'm also looking for long term wealth building over time.  Do investing in loans provide the same long term returns?

Daniel Fisher:  Great advice and I'll start listening to the podcasts as I have a couple of months before I have time to go back to the US.

K. Marie Poe:  I don't think I'm interested in purchasing a turnkey property, simply because the value has already been wrung out of the deal by all the middlemen.

Aaron Churnick:  I'm definitely interested in the long term value play, not the short term cash flow.  I want a place that is at least cash neutral, but has the potential for growth over time.   That's one of the reasons that I want to invest in the US right now.  It seems that it's the perfect storm with lower valued properties that should improve over time.

Jason H.:  I'll be sure and look up Chris.

Jilliene H. · Answer

@Nancy Capron Have you thought about investing in real estate in the United States through loans (notes) rather than physical property?   Typically no management headache with the loans.  Just a thought.

Daniel Fisher · Answer

If you get a chance, listen to a month or two worth of podcasts from The Real Estate Guys. They invest in lots of different markets and have a good handle on whats going on.