Long term invest

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Long term invest

Sejin Kim
Member since 2022 · 44 posts · 20 votes

Hello, 

what steps do you guys take for long distance properties? 

my husband and I want to buy a property for our vacation home. We will visit there once~twice a year and meanwhile we want to rent it out as short term rental. ( we are thinking of Florida and that market seems slow these days ) 

we are in CA.  We want Cash flow. 

we are going to get loan. 

So do you guys visit properties and then put an offer? Or do you just use realtor and ask video tour? Or do you put offer and then visit? 

We found properties we liked however in order to cash flow, we need to do good negotiations since the price we will offer will be much less than what seller asks.. 

it will be our first investment and we are excited and nervous. 

Any advice will be appreciated. 

Thank you. 

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January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
2y

I echo what others have said.  I sell the entire Emerald and Forgotten Coasts, or as I like to say, "between the Colas" (Pensacola and Apalachicola).  99.9% of my clients buy remotely, and many of them don't come in person, even for closing.  I am happy to tour you around if you DO choose to visit, but I am equally happy to do video tours, FaceTime with you, and anything else you need to be comfortable purchasing from a distance.  

I also come complete with recommendations for everyone from lenders (@Raymond J. Rodrigues is on my list!) to insurance brokers to inspectors to handymen and cleaners.

Happy to speak further with you about my area any time.

Thank you, @Michael Baum for the mention!

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  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y

    If you are financing 80 percent or more of the property, positive monthly cash flow to start out, is going to be very difficult. That is primarily because the cost of money (interest rate) is twice what it was two years ago.

    I suggest that you adjust your thinking about buying a vacation rental just a bit. If you can just break even on it each month, that is still a fantastic investment, because OTHER PEOPLE are paying off the bulk of the asset for you.  And that asset is probably going to be worth a whole lot more in 15 years than it is today.  

    Even if it didn't appreciate a single dime, it would be a phenomenal investment.  

    Example:

    You buy a $1 million rental.  You finance 80% of it ($800,000).  If you put it on a 15 year amortization, your guests pay off the $800,000 in 15 years.  So YOUR investment of $200,000 is now worth $1 million after 15 years, AND you own an income producing property that is completely paid for!  

    Find me an investment like that in the stock market, and I'm all in.

    Good luck!

    [email protected]806-672-7102
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    4Reply
  • Erica Calella
    Investor · Member since 2024 · 77 posts · 105 votes
    2y

    I did something similar and my preference was to actually view properties so that I could get a feel for the community and area, which isn't really something you can gauge just from photos alone. I live in NYC and purchased in Western NC. My realtor did also do a few video showings with me as well just because I couldn't get down quickly enough and I wanted to see the properties before they were snatched up. The travel costs do add up, but its good to weigh the costs to benefits. To me it was worth it to make sure I was making the right decision.

    Be careful with Florida condos. Apparently prices are diving because HOA fees are like $700 per month and I also read it's tough to get good insurance. Just a few things to flag during your search.

    0Reply
  • Sejin Kim
    OP
    Member since 2022 · 44 posts · 20 votes
    2y
    Quote from @Erica Calella:
    Thanks for the advice!


    I did something similar and my preference was to actually view properties so that I could get a feel for the community and area, which isn't really something you can gauge just from photos alone. I live in NYC and purchased in Western NC. My realtor did also do a few video showings with me as well just because I couldn't get down quickly enough and I wanted to see the properties before they were snatched up. The travel costs do add up, but its good to weigh the costs to benefits. To me it was worth it to make sure I was making the right decision.

    Be careful with Florida condos. Apparently prices are diving because HOA fees are like $700 per month and I also read it's tough to get good insurance. Just a few things to flag during your search.


    0Reply
  • Sejin Kim
    OP
    Member since 2022 · 44 posts · 20 votes
    2y
    Quote from @Collin Hays:

    Thank you so much for the insight!! That encourages me!



    If you are financing 80 percent or more of the property, positive monthly cash flow to start out, is going to be very difficult. That is primarily because the cost of money (interest rate) is twice what it was two years ago.

    I suggest that you adjust your thinking about buying a vacation rental just a bit. If you can just break even on it each month, that is still a fantastic investment, because OTHER PEOPLE are paying off the bulk of the asset for you.  And that asset is probably going to be worth a whole lot more in 15 years than it is today.  

    Even if it didn't appreciate a single dime, it would be a phenomenal investment.  

    Example:

    You buy a $1 million rental.  You finance 80% of it ($800,000).  If you put it on a 15 year amortization, your guests pay off the $800,000 in 15 years.  So YOUR investment of $200,000 is now worth $1 million after 15 years, AND you own an income producing property that is completely paid for!  

    Find me an investment like that in the stock market, and I'm all in.

    Good luck!


    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    2y

    Hey @Sejin Kim, welcome to the fray! :)

    Personally I am one who would look at the properties first. In person. I am not sure I am trusting enough to allow an agent to make those kinds of decisions. Not yet anyway.

    Florida is a tough nut in some areas. Are you looking for beach stuff? Theme parks?

    There are a few people here that I would ask about certain areas.

    @Andrew Steffens for Tampa and surrounding areas and @Shawn McCormick for Orlando and surrounding areas. See what they think.

    You can also reach out to @January Johnson for some panhandle areas as well. She knows her stuff.

    1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    2y
    Quote from @Michael Baum:

    Hey @Sejin Kim, welcome to the fray! :)

    Personally I am one who would look at the properties first. In person. I am not sure I am trusting enough to allow an agent to make those kinds of decisions. Not yet anyway.

    Florida is a tough nut in some areas. Are you looking for beach stuff? Theme parks?

    There are a few people here that I would ask about certain areas.

    @Andrew Steffens for Tampa and surrounding areas and @Shawn McCormick for Orlando and surrounding areas. See what they think.

    You can also reach out to @January Johnson for some panhandle areas as well. She knows her stuff.

    Thanks Michael!

    Hey Sejin! Let me know if you want to explore the Tampa area at all.  I work with a lot of (mostly actually) out of state investors.  In the Tampa area it is still possible to achieve a 5-10% CoC return (sometimes higher) on a property here if you are hiring full service management.  So there are positive cashflow opportunities.  Self manage returns can be 20-30%+.

    I do have clients who fly in for showings, or do virtual showings and fly in during inspections, and I have some clients who never come in at all! It really depends on your comfort zone.

    Please let me know if you have any questions!
    [email protected]813-563-0877
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  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    2y

    @Sejin Kim, I will also add that I would trust some folks like @Andrew Steffens to give me all the deets on a property without me seeing it.

    Contributors on BP that post a lot without asking for a thing in return are people I can get behind.

    4Reply
  • Sejin Kim
    OP
    Member since 2022 · 44 posts · 20 votes
    2y
    Quote from @Michael Baum:

    Hey @Sejin Kim, welcome to the fray! :)

    Personally I am one who would look at the properties first. In person. I am not sure I am trusting enough to allow an agent to make those kinds of decisions. Not yet anyway.

    Florida is a tough nut in some areas. Are you looking for beach stuff? Theme parks?

    There are a few people here that I would ask about certain areas.

    @Andrew Steffens for Tampa and surrounding areas and @Shawn McCormick for Orlando and surrounding areas. See what they think.

    You can also reach out to @January Johnson for some panhandle areas as well. She knows her stuff.


     Thanks. 

    we are thinking Kissimmee in FL near Thema Park because we go there once a year. 

    We are thinking to buy single family house or condotel( learned that new term recently ) 

    If anything I need to be aware to invest Condotel? It looks like people avoid condotels...

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    2y

    Hey @Sejin Kim, so CondoTel's are another animal. Most of the time you can't get traditional financing on them so you have to do another way.

    Oftentimes you can't self manage and have to use the sites management, which can be very expensive.

    Reach out to @Shawn McCormick, he can give you a ton of guidance on the Kissimmee FL area. It is easy to lose your shirt in that area so it is important to have someone solid. I would trust Shawn to advise me without traveling there.

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    2y
    Quote from @Sejin Kim:

    Hello, 

    what steps do you guys take for long distance properties? 

    my husband and I want to buy a property for our vacation home. We will visit there once~twice a year and meanwhile we want to rent it out as short term rental. ( we are thinking of Florida and that market seems slow these days ) 

    we are in CA.  We want Cash flow. 

    we are going to get loan. 

    So do you guys visit properties and then put an offer? Or do you just use realtor and ask video tour? Or do you put offer and then visit? 

    We found properties we liked however in order to cash flow, we need to do good negotiations since the price we will offer will be much less than what seller asks.. 

    it will be our first investment and we are excited and nervous. 

    Any advice will be appreciated. 

    Thank you. 


     What about a state adjacent to FL?

    The insurance rates have skyrocketed in FL.

    0Reply
  • Shawn McCormickPro Member
    Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
    2y

    Hi @Sejin Kim

    Thank you @Michael Baum!

    Looks like you are zeroing in on Kissimmee/Davenport. There are a lot of things to consider investing from out of state and especially with short term rentals if you don't have experience in that sector. 

    You mentioned cash flow as your focus. It is certainly obtainable if you do it right and are in the right communities. I can go over all of that if you like in a call. Most of them have townhomes and single family and a few have condos too. I see you mentioned condo-tels. I can agree with Michael and would not recommend those if you are trying to cash flow. Too many restrictions, most don't make money. Depending on your price point, I can direct you to communities and types of homes that would be best suited for you. I've helped many other BP> members purchase homes near Disney. If you would like to have a call, there is a link in my profile page to book one. 

    Best of luck, hope to hear back soon. 

    1Reply
  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    2y

    Hi @Sejin Kim, licensed lender here in Florida. Condotels generally require a minimum down payment of 20%, which all comes down to the condo financials and the condo questionnaire once under contract as to whether or not more than 20% down payment will be required. Condotels that allow short term rentals, are considered to be non-warrantable condos for the single fact amongst a few others, that they are transient in nature, similar to a hotel. If you are looking to short term rental a condo and also use it as a second home, while putting 10% down, you can forget about it. I would say about 99.9999% of condos that are transient in nature, do not allow for 10% down. The .0001 that do probably have something funky going on with their condo docs lol...  Conventional loans that allow second homes with 10% down, do not allow non-warrantable condos/short term rentals. I hope this information helps, if you have any questions regarding financing a second home always feel free to reach out! 

    [email protected]619-456-8311
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    1Reply
  • James CarlsonPro Member
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y

    @Sejin Kim

    Totally depends on you. We work with a lot of out-of-state investors wanting STRs in Colorado. They're all different. Some can't imagine buying without seeing the property. Others want to meet once and then feel comfortable with us doing video of the property. There's no wrong way.

    If you go the video route, make sure they take not only video of rooms, but of the drive up, of neighbors, of views of the street, etc. Might seem obvious, but I've seen some pretty myopic videos of vacation rentals that doesn't show the context. 

    And congrats on a big step. A second home is a pretty awesome purchase. Cheers!

    [email protected]720-460-1770
    1Reply
  • Sejin Kim
    OP
    Member since 2022 · 44 posts · 20 votes
    2y
    Quote from @Account Closed:

    Exciting times ahead for you and your husband with your first investment! For long-distance properties, it's smart to use a realtor and ask for a video tour to check out the place. 

    Once you find a good one, negotiate like a pro to get the price down for that sweet cash flow. Visiting before putting in an offer can be tricky, so video tours are your best bet. Keep your eyes peeled for a good deal in Florida, even if the market's slow now.


     Thank you so much! 

    that sounds good idea. I worried that we visited, we liked and then our offer wouldn't be accepted. So that's like a good deal! 

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Sejin Kim

    you got a perfect response from @Collin Hays

    positive cash flow will require you to be a top notch STR / hospitality operator.  is that what you want?  or do you just want to own a vacation home?  they're different.

    and please visit in person.  make multiple trips.  look at lots of properties.  this is not the market to get a video tour of 2 properties and make an offer.

    2Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    ChatGPT has entered this thread...

    1Reply
  • David M.Pro Member
    Investor · SF Bay Area · Member since 2019 · 11 posts · 12 votes
    2y

    I live in ca and purchased a vacation home / STR in Davenport. My realtor provided a video of the drive into the neighborhood, a walk around the house and then through each room, garage and pool. We bought it and didn't visit until verifying it was ready to launch on Airbnb. Did the video thing on a few candidate properties but really liked the layout and location of the one we bought. Keep in mind you could have additional cost for new furniture and fresh paint (cost us just over 15k) for 1800 sqft. We love it there, try to visit a couple times a year. As mentioned insurance has skyrocketed so be sure to check that. As far as cash flow, we have a loan at 3.2% and are just breaking even because we use a management co….they take a significant chunk but the appreciation has been good and it's nice having family gatherings there. Kids love universal and dizzy. I'm setting up to self manage it…hopefully can at least maintain the occupancy rate and keep some cash. Good luck. It is very exciting

    1Reply
  • David M.Pro Member
    Investor · SF Bay Area · Member since 2019 · 11 posts · 12 votes
    2y

    I live in ca and purchased a vacation home / STR in Davenport. My realtor provided a video of the drive into the neighborhood, a walk around the house and then through each room, garage and pool. We bought it and didn't visit until verifying it was ready to launch on Airbnb. Did the video thing on a few candidate properties but really liked the layout and location of the one we bought. Keep in mind you could have additional cost for new furniture and fresh paint (cost us just over 15k) for 1800 sqft. We love it there, try to visit a couple times a year. As mentioned insurance has skyrocketed so be sure to check that. As far as cash flow, we have a loan at 3.2% and are just breaking even because we use a management co….they take a significant chunk but the appreciation has been good and it's nice having family gatherings there. Kids love universal and dizzy. I'm setting up to self manage it…hopefully can at least maintain the occupancy rate and keep some cash. Good luck. It is very exciting

    0Reply
  • Sejin Kim
    OP
    Member since 2022 · 44 posts · 20 votes
    2y
    Quote from @David M.:

    I live in ca and purchased a vacation home / STR in Davenport. My realtor provided a video of the drive into the neighborhood, a walk around the house and then through each room, garage and pool. We bought it and didn't visit until verifying it was ready to launch on Airbnb. Did the video thing on a few candidate properties but really liked the layout and location of the one we bought. Keep in mind you could have additional cost for new furniture and fresh paint (cost us just over 15k) for 1800 sqft. We love it there, try to visit a couple times a year. As mentioned insurance has skyrocketed so be sure to check that. As far as cash flow, we have a loan at 3.2% and are just breaking even because we use a management co….they take a significant chunk but the appreciation has been good and it's nice having family gatherings there. Kids love universal and dizzy. I'm setting up to self manage it…hopefully can at least maintain the occupancy rate and keep some cash. Good luck. It is very exciting


     Thank you so much for your sharing! That really helps! 

    0Reply
  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
    2y

    I echo what others have said.  I sell the entire Emerald and Forgotten Coasts, or as I like to say, "between the Colas" (Pensacola and Apalachicola).  99.9% of my clients buy remotely, and many of them don't come in person, even for closing.  I am happy to tour you around if you DO choose to visit, but I am equally happy to do video tours, FaceTime with you, and anything else you need to be comfortable purchasing from a distance.  

    I also come complete with recommendations for everyone from lenders (@Raymond J. Rodrigues is on my list!) to insurance brokers to inspectors to handymen and cleaners.

    Happy to speak further with you about my area any time.

    Thank you, @Michael Baum for the mention!

    4Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    You probably want to visit it if you're going to make it your vacation home, even if just 1-2 times a year. Wouldn't you think?

    Florida is having a reckoning with prices, unless you're an all cash buyer in primo Miami most of the FL coast is a falling knife. Having cash flow in this market is kind of difficult to expect, you should aim at best to break even and if you don't have the cash on hand to handle the short-term volatility then don't invest in real estate. Go buy debt instead.

    99.9% of the agents, reps on this board are trash. And that's me putting it nicely. Do your diligence. 

    0Reply
  • Mason Parsons
    Member since 2024 · 6 posts · 1 vote
    2y

    Exciting times ahead for you guys! When I was house hunting from afar, I leaned heavy on local realtors. They did video tours for me, and we narrowed down choices before I flew in to check the top contenders. Negotiating remotely is tricky, but we managed by having a solid realtor who knew the local market. 

    Also, don't hesitate to haggle – sellers expect it. And congrats on diving into the real estate game; it's nerve-wracking, but the payoff can be sweet. Best of luck with your Florida venture!

    0Reply
  • Corey Phipps
    Member since 2018 · 9 posts · 2 votes
    2y

    Regarding visiting in person, I suggest you do. We bought our STR without visiting and are very happy with it. However, when we first visited prior to going live, we found that we had significantly more furniture / decorating upgrades and some cosmetic maintenance that weren't in our original estimates. It wouldn't have changed our mind, necessarily but did change our numbers.

    0Reply
  • Trent Reeve
    Atlanta · Member since 2022 · 710 posts · 640 votes
    2y
    Quote from @Erica Calella:

    I did something similar and my preference was to actually view properties so that I could get a feel for the community and area, which isn't really something you can gauge just from photos alone. I live in NYC and purchased in Western NC. My realtor did also do a few video showings with me as well just because I couldn't get down quickly enough and I wanted to see the properties before they were snatched up. The travel costs do add up, but its good to weigh the costs to benefits. To me it was worth it to make sure I was making the right decision.

    Be careful with Florida condos. Apparently prices are diving because HOA fees are like $700 per month and I also read it's tough to get good insurance. Just a few things to flag during your search.

    i would say you dont have to be scared, just do your number due diligence. HOA fees pay for a lot. You buy a house with a pool to compete for guests (because guests in Florida want a pool) how much are you paying monthly for landscaping, pool service/maintenance? also many HOA dues also pay for some utilities (water, internet, pest). you start adding up all those costs to pay on your own, you may end up paying more than the HOA costs. Not saying HOAs are perfect, but i also think they get a bad rap sometimes. and honestly, its cheaper to get insurance for a condo than for a house. (i speak this from experience, not just guessing)
    0Reply
  • Dustin SandersBusiness Member
    Realtor · Pensacola, FL · Member since 2019 · 89 posts · 29 votes
    2y

    @Sejin Kim I would check out Perdido Key, FL. I own a short term rental property there & it has been the best performing property I've owned so far. 

    It's a very affordable Florida beach market relative to the rest of the state of Florida & it is home of the US Navy's Blue Angels over at NAS Pensacola.

    I'm happy to discuss this further with you if you're interested in seeing my AirBnB for context & if you would like to connect to hear more about what you've researched so far.
     

    [email protected]850-529-3683
    0Reply
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