Out of state, sight unseen investing

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Out of state, sight unseen investing

Gregory SchwartzBusiness Member
Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes

BP,

Kinda freaking out a little, just made my first offer on a property from 700 miles away in a town I've never been to, on a quadplex I have no intention of ever seeing in person. To clarify this would be my first investment property. Basically, I'm taking a leap of faith, using lessons learned in "Long-Distance Real Estate Investing" to hopefully build a passive income stream. 

Hope my research pays off.

Basics on this first deal... 

Quadplex (Four x  2 bed/ 1 bath)

Asking 170k

Offer 155k

Rent per month: $1640 (market supports $1800-2000)

I'll try my best to provide updates on my huge success (or major flop)!

[email protected]443-812-0357
Schwartz Realty Group5118 Reviews
WebsiteView Page
12Reply
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Most Popular Reply

Ruthber P.
Real Estate Investor · Belvidere, IL · Member since 2015 · 12 posts · 11 votes
8y

Greg:    

First, do not get discouraged by anyone, someone else is doing it so you can, not going to be easy.

If not done already I suggest to look into this:

Enforce that PM uses a great website for rental screening, ones with a background check and choose the best tenants possible.

Review you leases to close any pitfalls and enforce the lease to the T.

Keep the units in good shape and keep extra cash reserves ( fixing + trip expenses )

Tiger than normal lookup on the PM ( have second PM line up ), vacancies, unit showing costs, repairs, fees, etc,  require a once a week normal operations report and a once a month full operations report.

Family, friend on virtual assistant that regularly drive by the property and reports to you, or if cash flow allows and deem beneficial you can install security cameras and remote view activity on the property, nowadays there are lots of options.

Check if feasible to get a home warranty plan for the units so some pain issues are self-managed by the tenant via a phone call to the warranting company


In which city/state is the property? 


Best of luck.

RP.

10Reply
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    Your risk tolerance must be through the roof. Hang on tight you are likely in for the ride of your life.

    6Reply
  • Ruthber P.
    Real Estate Investor · Belvidere, IL · Member since 2015 · 12 posts · 11 votes
    8y

    Greg:    

    First, do not get discouraged by anyone, someone else is doing it so you can, not going to be easy.

    If not done already I suggest to look into this:

    Enforce that PM uses a great website for rental screening, ones with a background check and choose the best tenants possible.

    Review you leases to close any pitfalls and enforce the lease to the T.

    Keep the units in good shape and keep extra cash reserves ( fixing + trip expenses )

    Tiger than normal lookup on the PM ( have second PM line up ), vacancies, unit showing costs, repairs, fees, etc,  require a once a week normal operations report and a once a month full operations report.

    Family, friend on virtual assistant that regularly drive by the property and reports to you, or if cash flow allows and deem beneficial you can install security cameras and remote view activity on the property, nowadays there are lots of options.

    Check if feasible to get a home warranty plan for the units so some pain issues are self-managed by the tenant via a phone call to the warranting company


    In which city/state is the property? 


    Best of luck.

    RP.

    10Reply
  • Gregory SchwartzBusiness Member
    OP
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    Thanks for the support. I do have a high risk tolerance due in part to being relatively young (30), having stable income (military) and setting my personal finance/retirement on autopilot with a course set for a comfortable retirement at 65.

    @Ruthber P. I appreciate the guidance. In all other aspects of this deal I plan on taking the conservative route. More than anything else I want a proof of concept for out of state investing, so that I can continue to take advantage of the best markets.

    This first property will be in Huntsville AL.

    [email protected]443-812-0357
    Schwartz Realty Group5118 Reviews
    WebsiteView Page
    3Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    Please tell me you've at least got a realtor that you can trust and a home inspector that wasn't recommended by this realtor...

    2Reply
  • Account Closed
    Northern Virginia · Member since 2017 · 16 posts · 15 votes
    8y

    I cant speak for an investment property, but i bought my house without ever seeing it in person or meeting the inspector. We did have the realtor Facetime us a walk though of it. Worked well for us. Maybe you can have someone do something similar. 

    2Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Account Closed:

    I cant speak for an investment property, but i bought my house without ever seeing it in person or meeting the inspector. We did have the realtor Facetime us a walk though of it. Worked well for us. Maybe you can have someone do something similar. 

     I've done this a few times, but I get anxious and the inspections always make me feel like it's the biggest dump ever. I typically will go out and visit before the end of the inspection period but after the realtor and home inspection is done...

    0Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    8y

    My opinion....HUGE mistake.

    No doubt it can be done this way, but to have this situation be your FIRST real estate investment property is a HUGE risk. There is a big learning curve to doing this well

    This type of deal is best done with someone with a decent amount of experience....it can be done, no doubt and be very successful.....but for a complete newbie?

    All I can say is that you have big balls.....good luck....hope it works out for you

    3Reply
  • Austen Howell
    Huntsville, AL · Member since 2016 · 8 posts · 19 votes
    8y

    @Gregory Schwartz I'm a Huntsville native and actually have some family in Hendersonville NC. If there's anything I can do to help you out in the Huntsville market, let me know! I'm currently working with an out of state investor who's interested in some single family deals.

    7Reply
  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    8y

    I've done this, a few times now, best way to do real estate imo

    the deal on the house matters less than the team you have in place on the ground to take care of this thing. If they suck, you're not going to have a fun time at all. If you have a great team, life will be easy, but you have to manage your team diligently. It's FAR from set it and forget it

    also, that deal is tight, so your potential headache is far greater. Find something with better margins!

    The first time I did this I bought a foreclosure that had weeds growing through the WALLS. I bought the house without seeing it, without having it inspected or my rehab guy seeing it. I bought it from lousy MLS pics only, but I knew it would be a great deal and it WAS! find a great deal and a great team and it's a breeeeeeeze

    [email protected]Podcast Guest on Show #301
    10Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    8y

    Agree that with a great team, this can be done very successfully..... this issue becomes when this is your first deal ever....where and how do you find a "great team"  and how do you even know they are "great"? That's where the experience comes in.....if you have someone in that market that has a "great team" already in place and you can use them, then fine....but if you are flying blind from the start, this is a very risky first move

    2Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Alexander Felice:

    I've done this, a few times now, best way to do real estate imo

    the deal on the house matters less than the team you have in place on the ground to take care of this thing. If they suck, you're not going to have a fun time at all. If you have a great team, life will be easy, but you have to manage your team diligently. It's FAR from set it and forget it

    also, that deal is tight, so your potential headache is far greater. Find something with better margins!

    The first time I did this I bought a foreclosure that had weeds growing through the WALLS. I bought the house without seeing it, without having it inspected or my rehab guy seeing it. I bought it from lousy MLS pics only, but I knew it would be a great deal and it WAS! find a great deal and a great team and it's a breeeeeeeze

     Preach, the teamwork makes the dream work lol

    0Reply
  • Gregory SchwartzBusiness Member
    OP
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    I blindly signed a 8 year contract with the USMC that has turned out all right. This seems less risky than that. I feel comfortable with the team so far and have had good recommendations from BP members. 

    Win or lose on this deal I'll keep you all up to date 

    [email protected]443-812-0357
    Schwartz Realty Group5118 Reviews
    WebsiteView Page
    12Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    Gregory Schwartz have you been to Huntsville before then? Sounds like you have been. If you have been it’s probably not that bad. If you haven’t I’d visit before buying anything. Make sure you get leases and deposits at closing if there are current tenants.
    0Reply
  • Tom O.
    Chicago · Member since 2018 · 216 posts · 165 votes
    8y

    I don't understand the never will see it part? You're investing that kind of money so what's the cost of a round trip plane ticket? How do you even know that the building exists and you're dealing with the owners, etc.? I would want to "kick the tires" so to speak. Seriously, you wouldn't buy a car site unseen. 

    After you buy it, again, why not go down there once in a while? You can write it off as an expense and wrap a vacation around it. 

    Seems highly risky for a first investment but those numbers are pretty low for a 4. Should cash flow nicely. 

    3Reply
  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    8y
    Originally posted by @Ned J.:

    Agree that with a great team, this can be done very successfully..... this issue becomes when this is your first deal ever....where and how do you find a "great team"  and how do you even know they are "great"? That's where the experience comes in.....if you have someone in that market that has a "great team" already in place and you can use them, then fine....but if you are flying blind from the start, this is a very risky first move

     Yep i agree its risky. Everyone knows it comes with risks, but what are you suggesting to about the risk? Avoid it? Silly.

    Risk is a measurement of potential negative variance. Its a mathmatics problem, not an emotional one. 

    Understand and mitigate the risks. Move forward. 

    @Gregory Schwartz same, did 4 years myself. It changes your perspective on 'risky' for sure.

    [email protected]Podcast Guest on Show #301
    7Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    Look at the morris invest ongoing disaster.... that's what happens when you don't do basic due diligence and have a poor team behind you. 

    1Reply
  • Justin Blue
    San Diego, CA · Member since 2018 · 14 posts · 4 votes
    8y

    @Gregory Schwartz please keep us updated! I believe that good or bad, this will be a fantastic learning experience. Remember brother, it's all about the perspective of life! I'm from North Carolina originally and I am working on some deals in the Jacksonville area. Let's stay in touch! 

    0Reply
  • Gregory SchwartzBusiness Member
    OP
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    Thanks, everyone. I really enjoy the multiple perspectives. The point @Alexander Felice makes regarding risk being a math problem resonates with me. The risk is worth the reward (at work we call it Operational Risk Management). The goal/reward here is to develop a process, much like David Green mentions in his book. If I take a few punches to the face in the beginning that fine, it's not going to kill me and will only make me a better investor for years to come.  

    The ball is in the seller's court now. I'll post again when I hear back!

    [email protected]443-812-0357
    Schwartz Realty Group5118 Reviews
    WebsiteView Page
    2Reply
  • Josh Stack
    Investor · Cramerton, NC · Member since 2017 · 336 posts · 198 votes
    8y

    Hey @Gregory Schwartz - others have said it but ignore the naysayers.  Define your plan, work the plan; learn from mistakes and you'll be fine.

    It's only as risky as you want to make it.  Define the risk, categorize the risk, mitigate the risk and control downside risks.  Pretty practical project management and risk management stuff you will be familiar with based on your military service.


    Go achieve your dreams.

    Thanks for the service, keep up the good fight for freedom.

    3Reply
  • Kevin Parsley
    Investor · Charleston, SC · Member since 2017 · 21 posts · 7 votes
    8y

    Semper Fi @Gregory Schwartz,

    I no lie have @David Greene's book sitting right in front of me and, I was also looking into the Huntsville market after listening to a different BP episode where a fellow servicemen was the guess and mentioned the market there. So first kudos to you for stepping out on that limb and getting started. 

    I encourage you to ignore the naysayers like @Josh Stack said and drive forward understanding that yes, while you are taking a risk, it is a calculated risk and one based off knowledge you've gained via someone who is actively and successfully doing this type of investing. 

    I am fairly new here and hope you don't mind but, I hear @Brandon Turner say all the time how BP isn't always used to it's full potential so, I hope you use BP for more than just showing us your progress and realize how helpful it can be. You could possibly see if anyone like @Austen Howell can help you as far as finding that rock star team or with current ARV and rental values, or maybe just asking someone to double check and confirm the numbers you ran.

    Either way best of luck and I look forward to seeing your updates.

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    8y

    Where is it?

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    "If I take a few punches to the face in the beginning that fine, it's not going to kill me and will only make me a better investor for years to come."

    If you want to be a better investor you can avoid taking any punches in the face by learning from the mistakes of others. Going into a investment with the anticipation of taking a punch in the face is a sign of either a very over confident investor or a very naïve investor. If you do not have the common scenes to avoid what you have already anticipated there is no way you will end up as a better investor. Learning from and avoiding the mistakes of other is how you become better. Your business plan is seriously flawed.

    3Reply
  • Tamara Thornton
    Real Estate Broker · Jacksonville, AR · Member since 2017 · 7 posts · 1 vote
    8y

    I agree with Ruthber! Do NOT be discouraged!! Faith is what you stepped out on, and Faith doesn't fail! 

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    Faith is a belief that is not supported by proof. 

    Fine for religion not so good in business.

    2Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    If you are not going to visit the area, find someone on BP who is local to the area, pay them $500 to attend the inspection and drive around the area and end you pictures / video.  

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
    WebsiteView Page
    7Reply
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