Investing remotely

[David K.]

Hello all, I am as new as they come but have decided to give it my best shot.. I am located in one of the most expensive areas (Long Island, ny) so investing into my first property locally seems like not the best option. Instead, I set my eyes on N. Myrtle beach area in SC. I am hoping to start my active pursuit by August. Please advise - if you buy remotely, do you always make trips to see the place or trust your local agent? It can be costly to make trips.. Also, what do you think about investing into this area- should I stay away from "vacation rentals"? There seem to be some interesting 4-6 unit multiples for a decent price but given that this is a vacation area how easy it is to keep them occupied? Thank you all in advance- you guys are awesome! David

[Ryder Meehan]

Hi David, I'm in a similar situation where I live in San Francisco so couldn't afford a walk-in closet here nor would it make sense since even if I owned here the cap rate would be negative.

I'm originally from the Dallas, TX area so I've been buying there since I have family around and I know the neighborhoods well. Unless you know a local you'll likely need a property management company to help you out but they take 10% of the rent typically plus a month's rent when they have to find a new tenant for you. It definitely cuts into your profit. I own a 4-plex, 3-plex and SFR and only use a prop mgr on the 4-plex since the others are newer construction and the areas are in high demand so there is easy re-rent. The 4-plex needs regular repair and tenants are more likely to not pay on time so it would be hard to do remotely.

I haven't owned a vacation rental so don't have experience there but wouldn't recommend it.  With the frequency of finding new renters it's high touch and hard to do remotely.  If the deal is good enough then you could still take it and rent it out on annual leases if the area is desirable.  For my 3-plex I have turned over a few renters and re-leased remotely.  I have a key lock box there and post the opening through Rentec (it posts it all over to CL, Zillow, Trulia, etc) and I get 20-30 call and emails within a few days.  I let them tour the vacant apartment by giving the key box code over the phone and take applications also through Rentec as well as background check.  If it was a sketchy area this would be pretty risky but it's an affluent place but I have family or a long-term tenant reset the key box after showings.  I also considered using TaskRabbit for someone to show the place for around $50/day so might try that on the 4-plex if I get ballsy.

In evaluating the deal originally I looked at comps, local rental rates and cap rate.  Admitted the 4-plex has close to breakeven with the prop manager, the 1 turn over cost me about $2,000 since the unit was vacant a month, they took a 1 month fee and the re-key plus cosmetic fixes that the prop mgr won't be as frugal as an owner would be.  Overall I'd still do it again.  I like the idea of building up a portfolio someone I want to live in the future like Florida then ultimately moving there when I'm bored with SF.

Hope that helps!

-Ryder