Turnkey/Passive Distant Investor

21 Replies

Hi everyone,

I am new to Bigger Pockets; from NJ, but living out of the country in Asia on work.  

I am yet to invest in a property, but ironically have been thinking more lately being so far away.

I want to invest in commercial real estate, or multi-family homes ideally but not sure if my budget can handle it.  As I am far away, geography isn't an issue as whatever property I choose to invest in has to be maintained by another person.

I am looking for passive/turn-key distant investor friendly deals but has been difficult to find deals in the $30-40k all in range; ideally would like to do about 2-3 deals per year. Any advise in this regard would be greatly appreciated!

Thanks,

Pranay.

You can probably find a few multi-family properties in the midwest, possibly Cleveland and Indianapolis in this price range. Both of these areas seem to be pretty popular in the marketplace properties for sale section on BP. https://www.biggerpockets.com/forums/517-real-estate-marketplace?property_listings=true

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Parany,

I will echo what @Lane K. says. As remote investor, you need trouble free properties and quality management. Just search on BP about mid-west PIGS and you will find literally thousands of posts regarding the risks and downside possibilities. 

In my opinion, when you are that far away, slow, steady and safe growth is better then fast, variable and risky. You would be better off doing 1 x $100K deal per year then 3 x $30K deal per year for several years.

Also, the quality of your management company is critical with you being so far away. Just think what you would do if (worst case scenario) you uncovered that they were stealing from you.

Good luck,

Oren

Hi, I'm interested in investing in a property in another country too. But I'm really worried about the management... As Oren said, you can never be sure they don't steal from you, for example... Or how good they take care of your property :( 

I just listened to the audiobook "Eviction", which followed the life and times of LLs and tenants from tough areas in Milwaukee for a couple years.  In the LLs toolkit was a drain cleaning snake, mace, an ample supply of eviction notices and one more thing.  Oh yeah- a gun!  Same price point rentals your'e looking at, Pranay.   Enjoy your 'passive' investments lol.

Originally posted by @Steve Vaughan :

I just listened to the audiobook "Eviction", which followed the life and times of LLs and tenants from tough areas in Milwaukee for a couple years.  In the LLs toolkit was a drain cleaning snake, mace, an ample supply of eviction notices and one more thing.  Oh yeah- a gun!  Same price point rentals you're looking at, Pranay.   Enjoy your 'passive' investments lol.

I read the book "Eviction" and I live in Milwaukee, so I can offer some insight.  The areas the author was writing about were D-class, inner-city areas.  These are NOT representative of all areas of Milwaukee.  I have bought plenty of properties in the $20k-$40k range and I don't have to carry a gun, mace, or bat.  I have been at my properties at night, by myself, and have no issues.

Hi @Pranay Uppuluri and good to meet you on Bigger Pockets. Is your preference specifically in the U.S.? It sounds like you might have some familiarity with the Asia market. Japan real estate is performing well in the Asia-Pacific region. That might be an option for you for high yield properties in the price range you mentioned, particularly for cash flow investments rather then for capital gain. Yield is between 6% to 12%. I would be happy to provide you with more information with a deal analyzer so you can see the numbers (price, costs, cash flow, yield etc.) 

Good luck!

@Pranay Uppuluri The Midwest and especially the Cleveland-area are great places to invest right now, as previous posts have noted. I also echo @Percy N. about being accredited--it will open up more passive investment opportunities for you.

In addition to turnkey, I'd also look into regional crowd investment platforms. Crowdfunding/crowd investing might be perfect for a long-distance investor such as yourself. Message me if you'd like some specific recommendations. :)

@Pranay Uppuluri  My game is not very strong in the commercial market.. I could work a deal in those if I needed to, but it's a totally different animal.. 

There are quite a few things to keep in mind on multifams...
  1. Try to avoid properties where you pay utils... Tenants crank the heat up in the winter and open a window to cool down. I just had a tenant who knew she was being evicted and so she must have left every faucet on for a month because we paid the water bills...
  2. Vacancy rates are pretty much doubled... In Indianapolis, I can fill a SFH in 2-4 weeks. It takes 4-8 weeks for multifams..
  3. Finding quality tenants is a struggle, and they do not generally stick around for long. I have a vacancy at one duplex currently.. We have had 10+ applicants and turned down 10+ applicants. If I hear one more person tell me that co-signing a loan doesn't mean they are responsible for the loan I am going to puke.. haha
  4. YOU NEED TO HAVE GOOD MANAGEMENT IN PLACE!!! You need to really do your research and find a good manager... You are out of country, you need to make sure you trust the guy watching your assets... I own a property management company and we work in the lower income markets. Below are some of the things we do.
    1. We do thorough background, credit and eviction checks.
    2. We have a 24 page lease that covers just about everything, and then some.
    3. We have a zero-tolerance policy on late fees.
    4. We pull periodic inspections.
    5. We try very hard to have our tenants pay rent online, or have ACH transfers completed for rents.
    6. Owners can log into a website and run reports, look at late rents, etc.
    7. We have move-in sheets we have residents sign, and we also shoot move-in and move-out videos in 1080p/60FPS(Gopro Hero 3).
  5. A lot of times you will find better profit in SFH's.. Whenever we get into bidding wars for multifams, the end buyer is usually settling for less profits.. I think it's because people want to tell their friends/family "Hey, I own an apartment building!"
  6. The price range you are looking at is definitely lower income. You are probably looking at 15-25k per unit. Your best money will be in buying one that needs a ton of work, and completing that work. If you go that route you are going to need a good manager with good communication skills.. You want videos and pictures on a regular basis during the rehab.
    1. Markets like mine, you can get your general contractors license if you can fog a mirror... I get 1-3 calls a week from investors who have been ripped off... I am SOooo tired of seeing this...
    2. DEMAND pictures and or videos... 
    3. Have a rock solid contract in case you need to dump a contractor and or the property manager.
    4. Do your research on your contractors and managers.. I can't stress this enough... I recently had a handyman apply for some work.. 2 of his 3 references were 1) his girlfriend and 2) a family friend... Pictures of his work were stolen from a website in Canada, and another one in Texas.

Do your research, and do what makes you happy... I am not trying to scare you off, just sharing with you some of the things to think about with multifams...

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    I'll back up Lee in what he said in paragraph 4, subsection 5.  If you are at a distance you don't want to deal with collecting cash or checks.  ACH is simple for landlords to do these days, and all your tenant has to have is a checking or savings account and you are set.  My other advice would be to be extraordinarily diligent in your tenant screening efforts.  Check everything including credit, criminal, and eviction and set strict standards.

    Good luck with your venture!!

    Welcome to the site @Pranay Uppuluri

    I think you would be better situated if you upped your price point to 50k+

    I am in one of the least expensive markets in the country and the market has rebounded. The days of finding anything worth owning in the 30-40k range are behind us.

    @Pranay Uppuluri , in my area, you are not likely to find a trouble free property for under $50k.

    You could syndicate a larger deal or look at other emerging markets in Asia, including India where the land can appreciate 200-300% in 2-3yrs. Of course there are risks too.

    Pranay,

    You can look at getting into apartment syndication deals.  Most deal sponsors usually set minimums. I see $50K mostly as an average but sometimes I see $25K as well.  Since you are overseas, passive investing w/experienced partners I would recommend as a great choice to consider.  I'm aware of some current opportunities if you'd like to PM me.

    Dave

    @Pranay Uppuluri I forgot to mention, we have a monthly digest of featured listings in Japan as well as regional business news. I can add you to the list if you want to stay on top of the market. You can PM me with your email address.

    @Pranay Uppuluri  We are looking for passive investors right now. We have the properties and the ability, but to grow our portfolio quicker we are looking to bring in investors. If you are interested let me know and we can connect.

    Another great way is to do private lending at fixed rates. We also use MANY private lenders to finance properties that we are flipping or in the first stages of buy and hold. 

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