Long Distance Real Estate Investing - Cleveland

[Remee Martin]

Hi BP

New Investor out of CA, making the move into REI in the Northern Ohio (Cleveland) area. Seeking quality contractors, handyman and investor friendly real estate agent referrals...and friendly warnings. My friend and I will be flying out next month to get familiar with different areas. All advice on the market appreciated.

Cheers

[Bob Galivan]

Ms. Martin: Some thoughts...

If you're going to be an absentee investor, the main focus of your trip should be to find a trusted advisor, more than trying to learn the market. As another poster mentioned, there is a vast array of investment possibilities here, which can be separated into levels of risk and levels of return. Generally speaking, the worse the condition of the property, the higher the cost of rehab, but the higher the potential of return. These properties carry a higher risk in terms of cost, but a much higher return potential. The advantage is that you control the entire rehab process, including providing for future mainteance. The choices made during rehab can come back to haunt. The other end of the spectrum are turnkey properties, where the property is rehabbed, often with a tenant in place. The risk is lower in terms of cost - you're paying a fixed price and you have an idea of return, but you dont know the quality of the work, and you don't know the quality of the tenant.

The investors that I work with generally provide guidance as to what they want to achieve for returns but stay pretty much out of the overall process. It's a better relationship if you are not going to be hands-on with management. If you structure your acquisitions properly, you can either be a sole investor or you can be part of a small group of investors getting into multiple properties together, with shared returns. It lowers the indivdual risk somewhat, and usuall yields higher returns because you increase your purchasing power.

Also be aware that Ohio law requires that property managers must be licensed, and must be affiliated with a real estate broker. There are firms that will offer to manage your property, but you need to make sure that there is a licensed Ohio broker involved. This is a protection for you.