Rental Property Investor · Melbourne, Victoria · Member since 2011 · 44 posts · 7 votes
HI BPers, I live on the other side of the globe from my "farm", the town where my 3 current rentals are (I use a trustworthy property manager), which were all move-in-ready when purchased. Now however I've just identified a potentially great rehab (a run down 2 bedroom I can add a 3rd bedroom to) in the same town but, since I live overseas, my question is: are remote rehabs considered too hard / difficult / risky to undertake, even for seasoned pros (which I am not); or can the risks be reasonably mitigated by hiring a good / trustworthy project manager? I would interested to hear of others' experiences using rehab managers (if that's even a thing). Thanks, Lance
Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
9y
Many times when you get involved in a rehab it can be like dating someone with multiple personalities... you never know what you are going to get when you wake up... same is when you start taking down walls etc... We have many clients that use us to manage their homes and many from Australia. I would never suggest getting involved in a rehab because there can be too many issues arise... also I think it is important to clarify definitions.
What are you considering a Rehab? we may have different definitions of what that actually means
Rental Property Investor · Melbourne, Victoria · Member since 2011 · 44 posts · 7 votes
9y
Ha ha! Are you the J Scott who wrote the "Book on Estimating Rehab Costs"? I just ordered your book a few days ago :)
Unfortunately I have to do my investing remotely: Australia where I currently live is just too expensive for me... until I have more experience and cash that is. So for now I invest in my home town in Texas, since I know that area well (and I go back there once a year or so). I've only bought move-in-ready until now, but would like to try boosting my equity through rehabs. Do rehab managers even exist?
Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
9y
Many times when you get involved in a rehab it can be like dating someone with multiple personalities... you never know what you are going to get when you wake up... same is when you start taking down walls etc... We have many clients that use us to manage their homes and many from Australia. I would never suggest getting involved in a rehab because there can be too many issues arise... also I think it is important to clarify definitions.
What are you considering a Rehab? we may have different definitions of what that actually means
Ha ha! Are you the J Scott who wrote the "Book on Estimating Rehab Costs"? I just ordered your book a few days ago :)
Unfortunately I have to do my investing remotely: Australia where I currently live is just too expensive for me... until I have more experience and cash that is. So for now I invest in my home town in Texas, since I know that area well (and I go back there once a year or so). I've only bought move-in-ready until now, but would like to try boosting my equity through rehabs. Do rehab managers even exist?
Rehabbing remotely is very difficult, especially when you can't hop on a plane to visit the job site when issues arise. The best way to rehab remotely is to spend a couple weeks/months in the local area, build a strong team, find a project manager who can manage that team, and put processes in place that will allow you to oversee the projects without being on-site.
When things go smoothly, rehabbing remotely is pretty easy. But, things rarely go smoothly. How would you know if your contractors are slacking off? How would you know if your project manager was incompetent or was stealing from you? How would you know that things were getting done correctly and with high quality? You wouldn't. You would have to trust other people, and when you don't know those other people well, you run risks.
I have worked on many remote rehabs that have run into issues -- either rehab issues, contractor issues or project manager issues. In many cases, the best solution is for me to jump on a plane and visit the site until the issue is resolved. Also, in many of cases, had I not been able to jump on a plane and resolve the issue in person, things likely would have gotten a lot worse. Of the 300 or so projects I've completed, I've only lost money on one -- it was a long-distance rehab that didn't go well; we ended up spending about $20K extra on repairs after the buyer's inspector found lots of stuff that was done poorly/incorrectly.
Rental Property Investor · Melbourne, Victoria · Member since 2011 · 44 posts · 7 votes
9y
@Steve Rozenberg: by "rehab" I mean a 2bed conversion to a 3bed (adding an extension, an extra bedroom).
@J Scott: sounds like a lot of stress if doing it remotely, especially as I wouldn't be able to just hop on a plane to correct any problems (not at 3k per trip anyway). how often do you typically need to visit the site in person for remote rehabs?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
9y
Originally posted by :
sounds like a lot of stress if doing it remotely, especially as I wouldn't be able to just hop on a plane to correct any problems (not at 3k per trip anyway). how often do you typically need to visit the site in person for remote rehabs?
I want to see every house before it's purchased and then I want to see it after it's completed. So, that's a minimum of twice per house. Typically, I'll see each house an average of once during renovation as well.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Long distance rehabs are difficult and without a full team there, you are asking for trouble. Half way around the globe makes it even more difficult. Why not find a deal in your backyard? certainly this deal on the other side of the world is not the only one.
Rental Property Investor · Melbourne, Victoria · Member since 2011 · 44 posts · 7 votes
9y
@Will Barnard: all members of my team, and my current properties, are in the town where this rehab is located... I just do not have a project manager on my team. Never had the need before: this is the first time I've contemplated buying a fixer-upper (all my others were purchased move-in ready).
My team is currently composed of those roles you'd expect of a buy and hold investor (RE agent, property manager, repairman, insurance & mortgage brokers, attorney, bookkeeper & CPA, etc.); I've assembled this team over the last 4 years of investing in the town (including several trips there to meet them, and buy property, in person).
Put another way: I'm *way* more confident buying in this town halfway around the globe than I am buying in the city I live in. Strange I know.
Having said that, all the comments here almost have me convinced just to walk away from it!
@Will Barnard: all members of my team, and my current properties, are in the town where this rehab is located... I just do not have a project manager on my team. Never had the need before: this is the first time I've contemplated buying a fixer-upper (all my others were purchased move-in ready).
My team is currently composed of those roles you'd expect of a buy and hold investor (RE agent, property manager, repairman, insurance & mortgage brokers, attorney, bookkeeper & CPA, etc.); I've assembled this team over the last 4 years of investing in the town (including several trips there to meet them, and buy property, in person).
Put another way: I'm *way* more confident buying in this town halfway around the globe than I am buying in the city I live in. Strange I know.
Having said that, all the comments here almost have me convinced just to walk away from it!
I see, that adds a positive into your do bucket, but I see contractors and sub contractors were not on your list. If that is missing, that is the second most important team member with the first being the project manager. Having the full team would make this much more desirable, but again, as we all have stated, team or not, long distance flips are difficult and the logistics are the main cause of that.
Rental Property Investor · Melbourne, Victoria · Member since 2011 · 44 posts · 7 votes
9y
I think I'm going to pass on it for now. I'll continue investing in the town, and travelling there. And while doing so maybe I'll try to build up a rehab team. Maybe then (and with more experience under my belt) I'll be more equipped to take on a remote rehab.