Long Distance Investment Properties

General Landlording & Rental Properties
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Long Distance Investment Properties

Amanda Bruneau
Real Estate Agent · Providence, RI · Member since 2020 · 41 posts · 29 votes

I love the idea of buying rental properties in a more landlord-friendly area, but the idea of managing a rental property from afar is terrifying. I would love to hear people's experiences with doing this and how it has worked for them. Thank you!

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Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
5y

@Amanda Bruneau

Investing out of state can be an excellent way to achieve better returns & cash flow especially if you live in a very expensive market.  Of course, you need the right boots on the ground team to assist with all aspects of the home including management.  So as long as you have the right team in place you can build a very successful portfolio with this strategy.  Ultimately I believe it is ideal to have a diversified portfolio across a few different markets depending on your goals.  That is how my wife & I have successfully built a large portfolio over many years allowing us to retire from our professional careers in healthcare.

I would highly consider looking at new builds in FL that have excellent cash flow, strong appreciation in a great area on a brand new build that could have $30k+ of immediate equity!  That is the best opportunity we've seen for quite some time in this market climate.  I'm happy to answer any questions you have at any point in time!

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  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Amanda Bruneau

    Investing out of state can be an excellent way to achieve better returns & cash flow especially if you live in a very expensive market.  Of course, you need the right boots on the ground team to assist with all aspects of the home including management.  So as long as you have the right team in place you can build a very successful portfolio with this strategy.  Ultimately I believe it is ideal to have a diversified portfolio across a few different markets depending on your goals.  That is how my wife & I have successfully built a large portfolio over many years allowing us to retire from our professional careers in healthcare.

    I would highly consider looking at new builds in FL that have excellent cash flow, strong appreciation in a great area on a brand new build that could have $30k+ of immediate equity!  That is the best opportunity we've seen for quite some time in this market climate.  I'm happy to answer any questions you have at any point in time!

    [email protected]800-311-6781Podcast Guest on Show How to Get 10%+ Off Your Next Real Estate Deal Right Now
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    16Reply
  • Amanda Bruneau
    OP
    Real Estate Agent · Providence, RI · Member since 2020 · 41 posts · 29 votes
    5y

    @Zach Lemaster thank you for your reply! Where in Florida have you been investing? I live in RI now, but grew up in Florida and have always known it is a good place to buy because housing prices are much lower and it is a landlord-friendly state. I have really only focused my efforts in RI and MA, but want to venture out and I do think FL would be a great option. 

    2Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Amanda Bruneau

    Absolutely!  We are mainly focused in Cape Coral.  Most all homes there appraise much higher than our sales price to the investor on these.  If you just connect on your own you likely will be paying full market value.  Because of the housing shortage there most homes have multiple cash offers within a few days of listing.  That is why we are focusing on the new builds specifically.  Feel free to see more info here:  https://renttoretirement.com/i... 

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    6Reply
  • Amanda Bruneau
    OP
    Real Estate Agent · Providence, RI · Member since 2020 · 41 posts · 29 votes
    5y

    @Zach Lemaster awesome! I will check it out! 

    2Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Amanda Bruneau

    Happy to help.  Feel free to let me know any questions you have at any point in time.

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    3Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    Many of our clients here at LaPlante have no difficulties managing from afar because we cover all the day to day tasks and make life easier for our clients. Where problems arise is when owners don't think they have to pay for certain expenses because they hired out PM. You're still the property owner, we aren't going to buy a new furnace for you! Hahaha! 

    1Reply
  • Rick Novotny
    Investor · Kansas City, MO · Member since 2015 · 128 posts · 89 votes
    5y

    @Amanda Bruneau

    I built a portfolio of 21 rental units in Kansas City while I was living in Denver and working a full time, unrelated career. I’ve since moved to KC to also be an agent out here.

    Building a long distance portfolio is really no different than local with the right property manager. Even though I live here now, I never visit my own properties and I still have no relationship with any of the tenants. Even the duplex I live in right now, I don’t know my neighbors but I own the place.

    In short, find the right team and you can build a portfolio anywhere.

    By the way, If you have interest in Kansas City, let me know. I am an investor agent with everything needed to start a portfolio including a management company with over 1,100 units under management.

    6Reply
  • Stacey So
    Investor · Dallas, TX · Member since 2017 · 16 posts · 10 votes
    5y

    @Rick Novotny How is the KC market? I’ve worked with a turnkey provider for my first 3 rental- phenomenal experience but they are sold out right now.

    2Reply
  • Francis Louis Vogel Jr
    Banker · Saint Clair Shores, MI · Member since 2011 · 131 posts · 53 votes
    5y
    All great posts
    0Reply
  • Allen Wu
    Rental Property Investor · Member since 2021 · 335 posts · 193 votes
    5y

    @Zach Lemaster

    How is SE Cape Coral area in your opinion?

    1Reply
  • Allen Wu
    Rental Property Investor · Member since 2021 · 335 posts · 193 votes
    5y

    @Rick Novotny

    Are there opportunities in KC area that will cash flow and have some appreciation? Looking for A and B areas with solid school system. I do not know the area well.

    0Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Allen Wu

    There is a huge population migration across the US to the sunbelt, but especially states like FL that are business & landlord friendly, have no state income tax, low property taxes, good weather, low cost of living, access to the ocean, etc.  Cape Coral is definitely one of these areas that has a huge housing shortage.  All the new builds we sell retails have multiple cash offers above listing price within a matter of days, and the homes we rent out all have many applicants before the build is completed.  I think there will be very strong appreciation over time.  The new builds we sell to our investors for around $240k will retail upon completion between $285k to $310k allowing the investor to have significant, immediate equity!  The S side of Cape Coral is already developed where these same 2,440 sq ft homes retail for $400k to $600k while the N side is still be developed & is more opportunistic to get involved on the front end of the curve.  There is only so much land...especially on the coast.

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    7Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    5y

    @Stephen Brown

    Laplante is in Ohio?

    1Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y
    Originally posted by @Hai Loc:

    @Stephen Brown

    Laplante is in Ohio?

     Yes sir!

    0Reply
  • Kelly McJunkin
    Real Estate Agent · Temecula, CA · Member since 2021 · 28 posts · 16 votes
    5y

    @Zach Lemaster This sounds very interesting to me. I see the break down of costs in the listings. Do these turn key homes already have management companies provided that are included in this? Thank you

    1Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    5y

    I decided to move instead of investing long distance - its just too easy for things to go wrong, and since you must rely on a property manager that is the worst part - my experience with PMs has not bee good.....  in the months that I had them they never leased a single unit and yet I was able to lease up all my units....  they over charged, did terrible repairs, charged me for the previous owners expenses,  etc etc etc.  basically the PM will never take as good a care of your assets as you will..   

    IMO find a way to invest c lose to home, or move to an area where you can invest.   

    2Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Kelly McJunkin

    Yes, absolutely! We have local, professional management in place for all of our properties allowing this to be a passive investment. If you look at the pro forma breakdown it shows the 8% management expense. Industry standard for this area would be 10%, but our investors are able to obtain the discounted 8%. The pro forma shows all expected expenses; taxes, insurance, mngt, future potential vacancy, future potential maintenance, debt service, etc. to allow you to have a realistic expectation for true net cash flow & ROI. I'm happy to answer any questions you have at any point in time.

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    6Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    Getting the right property management is the key. A quick google search should give you questions to ask property managements before working with them. Also, scheduling regular calls with the PM regarding your property is also a good idea. I always ask for photos whenever there is a major repair happening on the property. 

    0Reply
  • Amanda Bruneau
    OP
    Real Estate Agent · Providence, RI · Member since 2020 · 41 posts · 29 votes
    5y

    Thank you for all your reply's! Very helpful and being in the Northeast Florida is looking more and more appealing these day! 

    0Reply
  • Rick Novotny
    Investor · Kansas City, MO · Member since 2015 · 128 posts · 89 votes
    5y

    @Stacey So

    The KC market has been amazing for both myself and my clients. The market is very hot here and the good properties are getting a lot of attention.

    If you’re interested in purchasing here let me know. I have all of the connections you would need to build a portfolio here.

    0Reply
  • Rick Novotny
    Investor · Kansas City, MO · Member since 2015 · 128 posts · 89 votes
    5y

    @Allen Wu

    There are plenty of great areas here that cash flow well. I have seen great appreciation on my own portfolio over the last couple of years.

    Let me know if you’re interested in exploring properties in the area!

    0Reply
  • Ammar Muhammad
    Rental Property Investor · Los Angeles, CA · Member since 2020 · 14 posts · 7 votes
    5y

    I live in NYC but rent a property in Delaware. The day to day things are managed by a rental property management company. Its extra expense but its doable if numbers make sense. 

    0Reply
  • Warren Taylor
    Member since 2019 · 1 post · 0 votes
    5y

    @Zach Lemaster

    30% immediate equity? Can you explain to a newbie please?

    0Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    5y

    @Warren Taylor

    Thank you for the question.  I'm happy to explain & clarify.

    Equity is the difference between what you owe on the property and what the property is worth.  That means if you have equity in a property you can potentially either refi the loan on the property to pull capital back out to reinvest, or sell the property to access the equity to reinvest to buy more properties (ideally doing a 1031 to not pay capital gains tax).  Both of these are common strategies that we work with our investors on to be more creative to scale their portfolio quicker, and limit the amount of out of pocket costs to acquire more rentals.  Since capital to put down is the most limiting factor for everyone to scale, these strategies allow investors to recycle their capital quicker vs just saving up for another down payment.  When you hear about the brrr model, this is essentially the same concept of forcing equity by purchasing a property below market value, and then refinancing to pull a lot of your initial capital back out to reinvest.  For an inexperienced investor rehabbing a home for the first time has many risks associated with it, and often does not work out as anticipated.  There are other ways to pull equity back out.  These new builds are one of those ways.  All properties will grow equity over time simply from owning RE & letting RE do what it does!  Every year you own the property you should have more equity through the principal being paid down on the loan (by the tenant) reducing the amount owed on the property, and the home appreciating over time.

    Let me go through a numeric example with you on these builds specifically.

    We will use a new build that is priced at $238,000 that has an estimated market value of $285,000 upon completion which is typically the range that we are seeing with the new builds we are working on. If you buy the property at $238k with a 25% down payment your cost to purchase would be roughly $60k. Once the home is completed if it's valued at $285,000 you could either sell the home to a retail buyer to have a ~$40k+ initial gain year one (67% return on your initial capital invested), or you could refinance to pull a lot of your capital back out & still own the property as a long term rental which is what most of our clients are doing. A lender that does a 75% LTV at an appraised value of $285k would be a loan of $214k. Take $238k - $214k = $24k that would be the total out of pocket cost to own the rental, and would be $36k of equity that the bank is giving back to you from your initial $60k investment. Take $24k / $238k = ~10% downpayment that you are essentially into the property for which will skyrocket your ROI anytime you have less money into the property, and allow you to stretch your capital further. If the appraisal comes back above $285k, then you would be into the property for less than 10% down, and be able to pull out more capital. We've seen some of these appraise, or sell to retail buyers upon completion in the $295k to $310k range. All ways to be creative to limit the initial amount of capital required to own a rental property!

    I know this may seem a bit complex, so if you find yourself getting lost in the numbers I'm happy to explain this in greater detail to you.  Just send me a message.

    Hope this helps! As you can see this would be a very creative way to increase your ROI, reduce the amount of capital in an investment to allow you to ultimately scale your portfolio faster! This is another version of the BRRRR model (Build, Rent, Refinance, Repeat, Retire), and you don't have to try to find & rehab a property yourself! ; )

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    6Reply
  • Patrick TatroPro Member
    MA · Member since 2019 · 14 posts · 4 votes
    5y

    @Zach Lemaster are the CC fla homes in new developments or open lots in existing neighborhoods? What is the typical tour around time from purchase to being rented?

    1Reply
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