How do you verify the person who’s verifying the deal?

Question

Out-of-state investing creates a weird problem:

An agent says the property looks fine.The property manager says it should be rented.The contractor says the repairs are manageable.The inspector says to call three more specialists.

You have plenty of opinions, but you’re still relying on people who may get paid if you buy the property or hire them afterward.

For those who buy remotely, who gets the final word before you move forward—and what did they do to earn that level of trust?

G. Brian Davis · Answer

I don't think there's one final word. I use the inspector, property manager, contractor, and agent to build the full picture, but I still make the decision based on the underwriting. If something doesn't add up, I keep asking questions.

Greg Scott · Answer

Trust but verify.

The people I know that have had problems buy from an agent, and since they don't know any contractors they take a recommendation from the agent.  The contractor says the work is done and can be rented, and since they don't know any property managers, they take a recommendation from the contractor.  All along the way they are told everything is perfect until the expected profit never shows up and they are deep in the hole.

Here is a better way.

An agent finds you a house you like.  You find your own inspector who gives you an opinion.  You find your own contractor you work with in the rehab scope.  (Maybe you find 2 or 3 contractors to compare quotes.) You compare the inspection report to the contractor's report.  You ask questions on things that don't align.  You don't buy if there is a lot more wrong with the house than you underwrote for.  If you choose to proceed, you hire the inspector to come by from time to time to take pictures of the rehab.  You ask your contractor to send you pictures of the rehab. Meanwhile, you find your own property manager. You ask them to go by and look at the rehab and see if they like what they see. Pay your inspector to verify the scope of work on the rehab is complete. Ask your property manager if anything else needs to be fixed before it is "rent ready".

Those sorts of checks and balances result in trust but verify.