Rehabbing an out of state property

[Damian Baynes]

Hello all,

I'm still fairly new to these boards as far as posting is concerned but have been browsing through them for sometime now. I'm debating a few different investing strategies that I would like to pursue and one of them is buying a property that needs some TLC but is located about 2 hours away from where I live. How do you all feel about rehabbing a property that you can't visit daily? I'm not talking a total gut reno but a little bit more than just paint and landscaping. Does anyone have any experience/advice for this strategy? Also, this is not for a flip. This would be for a buy and hold investment. Look forward to your responses.

[Mehran K.]

Damian B I'm in the same boat you are as I live in Los Angeles. Price to rent ratios are just not happening for me AND evictions are ridiculous out here. I decided to buy a property out of state that has already been rehabbed and is tenant occupied. I close on Friday April 5th.

Make sure you do your market research, due diligence on the property, and have a great property manager lined up. If you check FilesPlace, the BP founder Josh Dorkin uploaded a great PM Interview sheet.

Even though it is a buy&hold, always have exit strategies in mind. So instead of just the numbers the property produces, make sure it's attractive to sell (location, schools, crime rate, amenities). Maybe to an owner occupant or another investor.

My future strategy is to pay cash for a distressed property, rehab, place tenants in, and obtain financing to rinse and repeat. It's hard to do the right due diligence to get real estimated numbers when I can't even visit the property though. It turns out the property management lady I am using for property #1 has managed many rehabs for previous investors for a fee. So right now I'm reading a few books on the subject, including J Scott's books so I can plan this out right.

There area also a few turnkey providers that will acquire properties and rehab with your money, rather than theirs, so you can benefit from this process. They may skim a little off the top, but they do all the work. They make money from the purchase (as buyers agent), rehab (as in-house construction crew), Property Management (in-house), and they probably have deals set up with lenders also. Make sure you do some serious due-diligence when looking at this option, same as anything. I may try out one of these companies for property #2. This way I can watch how they are doing it while I'm learning.

It feels good to have a plan, I love this stuff.