Remote Flipping, is it possible?

Question

I have an international friend that flips in the Netherlands and Spain. She wants to learn if it's possible to flip in the United States, remotely, and what that would look like. My guess is that it could be structed as one person handles everything locally 'boots-on-the-ground', and the other acts as the investor.

Has anyone see or done deals like these? Do they work, not work? What's something to look out for?

Peter Mckernan · Answer

It could happen.. It would just need to be a situation where they have great contact with the person doing that managing of the project (I.e. have known the person for years, great reputation, person has experience in flipping etc.). There are people that do flipping in other states while they live in another state from the projects and they are successful, but they have built a team while doing it.

Pat Lulewicz · Answer

I agree with both responses @Chris Magistrado. Its a lot of money to put into someone who's new to their life or the industry. Even trusting a brand new GC who's licensed/"qualified" is a risk from out of state, let alone out of country. That said, I do this with a a few investors on rentals since I'm a Realtor and Property Manager where I am boots on the ground for purchase, rehab and lease-up, however we had a strong professional experience/life together before partnering.

Lending will also be a consideration as most lenders are hesitant to lend to non-citizens given the foreclosure challenges it can pose. So its either all cash, findings those needle-in-a-haystack lenders, or would need to be some other creative structure

Michael Smythe · Answer

@Chris Magistrado if she knows what she's doing and consistently keeps a sharp eye on what's going on it's possible.

Should have local "inspector" that can verify what's done and how well, before paying contractors.

Montse C. · Answer

Thank you for sharing your ideas! I'm glad to see there are possibilities to invest remotely.

We are considering a future project in the United States, specifically in Florida, Texas, or California. We are not familiar with any of these markets, nor do we have anyone trustworthy there, or a real estate agent.

Our approach would be both rental and house flipping. We want to acquire a property in one of these areas, not only as an investment but also as a place where we can stay when we visit the United States. We'd love to escape the cold Dutch winters and enjoy a warmer climate.

When we're not using the property, we plan to rent it out as an Airbnb to generate passive income. Given your experience, what do you think about this strategy? Do you have any advice on the best markets for this type of investment?

Scott Trench · Answer

Buying a turn key rental, in an area you know or knew well, with a property manager you've met and trust, in an area that is large enough for you to have other options to find contractors and property managers?

This is fine. You'll have a slight disadvantage compared to the local population, but nothing that should crush you. Plenty of people invest remotely, and as long as you have modest expectations (not chasing the highest possible yield), and are using light leverage, and don't get suckered into buying in a part of town that you wouldn't feel comfortable visiting in broad daylight, plenty of people do this and do... fine. Not incredible, but fine.

An out of state flip or flipping business, handled completely remotely? I'd just as soon donate to the local contractor union's retirement fund.

Montse C. · Answer

@Chris Magistrado

@Ken M. @Peter Mckernan @Pat Lulewicz @Michael Smythe @Andrew Freed

Thank you very much! for all the responses, they have been very constructive. I really appreciate your opinions.

I still have some doubts because I know people who have bought properties from a distance from Spain and it has worked well for them. To do this, they have a team consisting of an inspector, a makelaar, and renovation professionals.

However, as Ken M. mentioned, having someone trustworthy there to manage everything would also be a key factor.

________________________

Montse

Andrew Freed · Answer

@Chris Magistrado - I think there is too much risk associated with remote flipping. Everyone in real estate will be incentivized to upcharge your friend along the process hurting profitiability.

Regarding next steps, I agree that the best way to approach this would be to have one person act as boots on the ground and the other person handle the back office related items. Additionally, the boots on the ground partner has to be extremely trustworthy. I've heard situations like this go south way too many times. Good luck on your journey!

Chris Magistrado · Answer

Wow so many great replies and advice. Thanks so much @Michael Smythe @Pat Lulewicz @Peter Mckernan!

Remote Flipping, is it possible?

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