Strategies for long-distance house flipping

9 Replies

Hi, I'm looking for some recommendations from people who have completed long-distance house flips and rehabs.  I live in Denver and I'm looking to do flips out of state due to the challenge of finding homes in Denver and the high price points.  I completed one flip in Kansas City earlier this year with a full-service broker.  I made some money but it didn't go as smoothly as I would've liked.  I'm trying to figure out how to estimate the rehab that will be needed, and then how to manage the project from out-of-state.  I think one option is to have a partner that is local that can help.  I've read @David Greene ' s book Long-Distance Real Estate Investing and he had some good recommendations.  However, if I'm doing a flip I won't have a property manager to help, and if it's an off-market deal, I also won't have an agent/broker to help either.  That means I would need great contractor that I trust to provide the initial estimate and to manage the entire project themselves.   Does anyone have any experience in this area?  Thanks.

I would never do a long distance flip. Managing contractors locally and prevent them front ripping me off is difficult enough. If I was not personally on site every day there is no way I would be making money.

Long distance...no way.

@Dave 

@Dave Vona I'm in the process of doing that right now in KC. I found a contractor on here Who has been phenomenal so far . Great quick communication and fair pricing. It's wrapping up this week, just waiting for final pics. Let me know if you'd like his info. 

@Dave Vona certainly there are other ways, but your suggestion of acquiring a partner may be a good approach for you. We (@Daniel Burke & I) have three flips in the rehab process right now and will be closing on our 4th in two weeks. Because of the local  Wichita "partner" we have found, the process of evaluating, acquiring and rehabbing has been pretty smooth so far and we foresee our business scaling faster and more constantly then if we were on our own. 

We have had the same issue as you. Having the inability to properly evaluate the rehab cost and managing the contractors. Our "Partner" is very knowledgeable with our Wichita Kansas market, with years of flipping experience and we are fortunate to have found him. 

Often a partner is thought of as a 50/50 co-owner that would hold equitable interest in the deals engaged in. You don't have to set it up that way and may be inadvisable as your new found "partner" may be somewhat of a new acquaintance. 

Finding  people to work with you is tough as a newbie because we often feel that we have nothing to offer. That is not the case. We all have something to offer and that "something" differs with the needs of the person you are currently speaking with. Our limiting factor is; we don't know -- what we don't know. Let the other person do the talking and they will be to light what you have to offer them. All you have to do is be attentive and interested in what they have to say. Although we ourselves are somewhat new to long distance flipping, we have found that when we offer anything in a highly transparent manner, showing how everyone wins as a result of the opportunity, other RE Professionals have been interested in working with us.  This also has proved true when negotiating with potential sellers. 

We (@Daniel Burke & I) have also read @David Greene 's book, LONG-DISTANCE REAL ESTATE INVESTING. For those reading that haven't read it, I highly recommend it and it can be found here https://get.biggerpockets.com/longdistancebook/ . 

David's book is what spurred us to network network network which has helped immensely in finding the right people for the right job through word of mouth, not to mention the knowledge acquired from the folks that we have crossed paths with. I guess my point is, we have found that  our "core 4" maybe different then David's core 4; and that's OK because it produces the same result; which is to build a team  that consist of the right people, for the right job, for our specific investing strategy.

Sorry for the ramble and getting off the long distance topic. I'm just so flippin' excited to be doing what I'm doing...

Blue skies always, Dustin

Originally posted by @Dustin Burke :

@Dave Vona certainly there are other ways, but your suggestion of acquiring a partner may be a good approach for you. We (@Daniel Burke & I) have three flips in the rehab process right now and will be closing on our 4th in two weeks. Because of the local  Wichita "partner" we have found, the process of evaluating, acquiring and rehabbing has been pretty smooth so far and we foresee our business scaling faster and more constantly then if we were on our own. 

We have had the same issue as you. Having the inability to properly evaluate the rehab cost and managing the contractors. Our "Partner" is very knowledgeable with our Wichita Kansas market, with years of flipping experience and we are fortunate to have found him. 

Often a partner is thought of as a 50/50 co-owner that would hold equitable interest in the deals engaged in. You don't have to set it up that way and may be inadvisable as your new found "partner" may be somewhat of a new acquaintance. 

Finding  people to work with you is tough as a newbie because we often feel that we have nothing to offer. That is not the case. We all have something to offer and that "something" differs with the needs of the person you are currently speaking with. Our limiting factor is; we don't know -- what we don't know. Let the other person do the talking and they will be to light what you have to offer them. All you have to do is be attentive and interested in what they have to say. Although we ourselves are somewhat new to long distance flipping, we have found that when we offer anything in a highly transparent manner, showing how everyone wins as a result of the opportunity, other RE Professionals have been interested in working with us.  This also has proved true when negotiating with potential sellers. 

We (@Daniel Burke & I) have also read @David Greene 's book, LONG-DISTANCE REAL ESTATE INVESTING. For those reading that haven't read it, I highly recommend it and it can be found here https://get.biggerpockets.com/longdistancebook/

David's book is what spurred us to network network network which has helped immensely in finding the right people for the right job through word of mouth, not to mention the knowledge acquired from the folks that we have crossed paths with. I guess my point is, we have found that  our "core 4" maybe different then David's core 4; and that's OK because it produces the same result; which is to build a team  that consist of the right people, for the right job, for our specific investing strategy.

Sorry for the ramble and getting off the long distance topic. I'm just so flippin' excited to be doing what I'm doing...

Blue skies always, Dustin

 your projects are in Wichita  ??? or out of your market area..   the key to this is your GC  hands down.. great one things go OK  to good..

bad one and you just lost money..  highly highly risky to flip from afar for most folks.  

@Dave Vona GCs still take management.. you need a project manager or some type of boots on the ground to make sure things are going well and your plans for the project are being carried out with timelines, quality, budget etc.

@Jay Hinrichs our projects are in Wichita. We are flipping long distance as have residence in Montana but currently work my W2 job in Canada and my true partner is my brother (@Daniel Burke ) which resides in Cali. 

We chose the Wichita market for numerous reasons. A few being that, 1. we didn't want to face the hurdle of financing to get started in RE and Wichita is a more affordable market then where we currently live. 2. I have family there so have an excuse to travel there anyway. I was there Sept and will be there again on the 21st of this month. 3. We want passive income like everyone else. We feel like in order to get anywhere close to that, we need to be "hands off" from the start. Thats hands off in the literal sense of course. We are knee deep in the processes and am focussed more on the long term outcome of our efforts today vs the short term gain.  

Risky? Absolutely! I ask everyone reading this to please pray for the growth of our company while upholding the core values we believe in.  

Thanks Jay for your words of warning. We need to be reminded...

Blue skies always, Dustin

Thanks for all of the great feedback.  I know there is risk but I also hear about others being very successful with long-distance rehabs.  I've heard of people using a project manager that is paid a flat fee per property, but I would think someone that has a stake in the success of the project would provide a better outcome.  A 50/50 or some other split could be arranged.  I agree that finding the right people to work with in the local market is key, and that may take a couple of projects to figure out.  I'm currently looking in Omaha, NE and need to continue meeting other investors there that may make good partners. 

@Dave Vona I would start with a rental that is managed by a good PM. The PM has access to contractors and can help you with not overpaying. Rehab a few rentals, collect the cash flow and build your team.  It will be less likely for a contractor to rip you off if he fears losing future business with you. 

@Dave Vona I can't offer much advice on long distance flipping from personal experience. As you probably know there are companies or private individuals that are doing flips and are looking for investors.  This might be an alternative to doing the flips yourself, limits returns but also limits risks as well. 

It's interesting to think about how this could be done so that all parties have a vested interest.  A smaller local investor that is looking for less risk via a partner seems possible, just not sure how the dynamics of the partnership would work.  Partnering with a contractor might create a situation with possible conflict of interests.

With technology and a doable drive I would think if there was a will, there's a way.

John