All Forum Posts by: Gregory Childs

John,
We do all of our investing out of state.
In normal real estate it is location, location, location. In out of State investing it is contacts, contatcs, contacts; verify, verify, verify; and spread, spread, spread.

What I mean is:
Contacts
You have to build relationships, just as you would locally - these can be built "virtually" but it takes time. You start with a couple of core contacts and build out from there. You also have to learn about the market sufficientlly so that you can speak with a level of authority about it - i.e. understand the difference from buying in Grant Park or Decatur (Atlanta GA) and how the client base differs based on your decision. You need to be informed - but allow your local contacts to be the experts.

Verify
Once you have the contatcs built you still have to verify the data. So, for the contractor example, you need to not only verify the history, reputation, licence, insurance, etc but once the project is underway you need a third-party inspector to verify the work is completed prior to a draw request being paid. That will cost around $200 for each verification; but will keep the contractor honest. The same goes with value estimates - always verify with a desktop appraisal ($85) or perhaps a BPO ($100+). And if your gut tells you different from what you are hearing from your local expert - go with your gut.

Spread
Assume something will go wrong and build a 10-15% spread. In Chicago we had a water leak in the basement that cost us $1,500 to rectify, in Phoenix we had a swift market downturn that kicked us in the rear on two properties (illegal immigration checks policy). In Atlanta we had one property that took us 6 months to move.. mainly because we wanted more that it was realy worth on the market.

Other than that it is really not that different than investing locally - in fact it has its advantages as you cant just drop by the job site to check-in on the action; so you go home and play with the kids instead.

We invest out of State because we want a shorter sales cycle and a lower entry point to provide a good cash flow product. It works for us!

Oh, one other thing - automate as much of the process as you can and get local representation (Attorney, Title, etc). That way you standardize your process and are certain you have complied with the local regs.

TTFN,

Greg

Ray,
I live close to Tampa - from what I see prices are still dropping in most low income/entry level areas. So buying correctly is key - you have to buy under market just to ensure that any deteriation in the pricing will not impact your equity position. Buying cash will give you that leverage.
I agree with Matt on the refi option - but more importantly do you have a long-term exit strategy? How will tying up your capital impact that strategy?
It's hard to go broke if your debt load is insignificant.. cashflow is king. Remember, real estate isn't as liquid as it used to be, so make sure you can support the debt load if you do use finance.
Equity building in Tampa is also a longer term objective than it used to be - so see if their is a way to add value (add an extra bath/bed) to make the property more marketable (and comparable) to the neighborhood standard. In some neighborhoods parking can be an issue - so off street parking is a big plus.
Whatever you decide this is definately a time to be adventurous - we haven't seen these RE prices in a long time in Florida. Although, in the interest of full disclosure, we invest out of State - but that's because we have a short-term focus.
If you dont know her, Tiaa Cartright (TBRIA) is a great contact to have - she runs a meeting every Wednesday up on Bruce B Downs/I-75.
TTFN,
Greg

Peter,

We only consider SFH; they are much easier to manage and sell when you are ready to exit. It is simply a more liquid asset.
[SOLICITATION REMOVED]
TTFN,

Greg

We almost always pay something towards closing costs (up to 3% depending on offer) - however, if you can, push them towards using a lender that you know can get the mortgage closed.. that way you get your profits quicker.

I don't see this changing anytime soon.
TTFN,

Greg

Bill,
Keep going back - rather than always moving forward trying to find new props to make an offer; go back every 60-90 days and make a revised offer a few thousand less than your provious i.e. offer #1 $39k, offer #2 $37k, offer #3 $34K at some point they may bite.
I had a friend just get a home for $9k that his initial offer was over $22k; it took him a while to get them to bite - but his margins look a lot better at $9k than they ever did before!
Be persistent on the properties you would like to own and it will pay dividends... eventually.
TTFN,
Greg

Warren,
Just sent a property to your email for you to review.
TTFN,
Greg

Why couldn't you just invoice his company for a consulting fee - independant of the property. the fee could be for any variety of legitimate services that you have offered.
If he doesn't pay - you know not to refer business his way. Relationships are so important and following through on a comitment is part of relationship building.
TTFN,
Greg

Send me an email - i'll send you something to compare.
TTFN,
Greg

Who knows! You have no contract to go by.

If he cleans the place and it is in great shape when he leaves - give him the rent back for being a good guy. If he doesn't, tell him you'll refund him a check if you rent the room before the 26th for the overlapping portion - that's the right thing to do.

Next time write up a contract, so you know what to do. Good luck.
TTFN,
Greg

When we have lost money on a deal it is for one reason only - time! If we had moved faster to exit we would have made money.
Time is a killer in this market. Have your exit strategy in place and don't delay. Momentum is essential.
TTFN,
Greg