Suggestions on how to begin investing 3hrs away?

Question

It's been 20 days since my first introduction post and I have been researching, reading, listening to podcasts, pretty much absorbing as much as possible.  I recently upgraded my account to Pro so I could use the Rental Property Calculator as much as possible.

As of right now, I have determined my financing options and narrowed down my investment area to Binghamton, NY. I'm currently working on my business plan with a focus on rental properties and continuing to fully research the area.  Next steps for me is to take a drive to the area and familiarize myself of the neighborhood. I have also been attending networking events.

Since I do not live in the area I plan on investing in, I have been wondering how did all of you build a foundation where you could be as successful as possible? Who were the key people on your team? Some questions I have are:

1) How did you vet your numbers? I have only being using MLS listings to see the numbers (just as a beginning step).

2) How did you vet local contractors?

3) How did you manage renovations (from a distant?

4) How did you vet real estate agents?

5) If you invest in an area you don't live in, did you use a Property Management company?  How did you vet the company?

I welcome all and any feedback or suggestions.

Thank you,

Fiona

Nate Fenson · Answer

I grew up here, and be very careful of the severe differences in the local markets in Binghamton, NY. The term 'other side of the tracks' is very true here. One street is good, the one next to it is bad. It is very easy to have something look good on paper in this town and then realize you can't get a good tenant in there.

Gary Kline · Answer

that's Bingotown for ya.... Been closing deals there for 25 years...  There are some great student rental areas.... Seems the best way to go.  Good luck.

Gary

Craig Bowen · Answer

Hi Fiona and welcome to Real Estate Investing 101!  You could not have come to a better place.

I currently live and invest in South Carolina but I can give you my ideas and I'm sure others will comment.

First, I'm assuming you are investing 3 hours from New York City due to prices and competition.  I cannot comment of the validity of that but I will tell you that once I am comfortable with my local knowledge I will be investing in Indianapolis (wife's family area) and will find myself in the same boat as you.

So, to question #1 - Vetting numbers is the same everywhere.  Set your parameters and do not stray for ANY reason.  The MLS is a fine place to start.  When I first started looking at properties here, an agent, who I met quite by accident, showed me two properties she said would work for investments.  I had paralysis by analysis back then and passed on both.  Both were eventually flipped and provided fairly handsome profits.  I discovered this after I became an agent and had access to the MLS myself!  So do not discount the MLS but in addition, use this site and any local REIA's to find wholesalers and agents in your chosen area.  Believe me they will come out of the woodwork if they know you are in town and have money to spend.  BUT, and I can't say this enough....know your limits and stick to them.

#2 - I am a retired contractor myself, but this is a different game.  Where granite is the low end of most custom homes these days, formica and chrome will become your friends!  Not that you need to actually do the work, but certainly understanding the process and what to look for in a contractor or partnering with someone who does, is of huge importance.  A great book that will help you learn what/who to look for is J Scott's "Book on Estimating Rehab Costs".  What you learn in there will help you vet the contractors and make sure you are getting the most bang for your buck.  Oh, and set your keywords here and keep asking here.  Someone will know someone!

#3 - Have not done that yet.  Will let you know when the time comes!

#4 - Finding an agent is tricky.  I became one for access to the MLS, but have sold several conventional deals through open houses for other agents in my brokerage.  That has exposed me to good agents and agents who are not interested in the least in investors.  Make sure the agent IS an investor or works for some in that area.  Then hand them your criteria and see what they bring you.  Most will not want to run 200 deals or write 100 offers to get you one, but the conversation will lead to what and who they know, along with what they are willing to do in your absence....hold open houses, help stage the homes, put you in contact with like minded buyers, even keep an eye on the project in your absence, etc.  If I thought I would make 3k or 4k for the effort of driving by a home I was going to get the listing on, to let you know whats going on, I'd do it in a second!!

#5 - I do not have property worthy of paying a property management company yet, but rest assured, I will use one when that time comes!  And it will be in the area I LIVE IN!  I want nothing to do with leaky faucets while Mickelson is on the 18th hole at the US Open on Fathers Day with a chance to finally win!  Figure the 10% into your numbers and pay it.  You will sleep much more soundly.

That is my two cents.  Disclaimer; I am a rookie as well.  My only experience is that I know the construction game and have made some good money from flips in easy times....this is a different time but there are a million articles in here about reacting to different markets so I plow ahead...sort of fearless at this point!

Best of luck to you Fiona!  See you on the forums!!

Alvin Pereira · Answer

I invest out of state mostly and I would say for you to succeed, build a solid group of contacts first. I did hard calls, asked for references and portfolios as if I were hiring them for a job (which technically I was). Shop around and treat every conversation like an interview. You'll get a good grip on who you feel comfortable with after you talk to a few folks.

As far as property management goes, yes. I use property management companies for my out of state properties. For a few reasons, mainly I don't have the time to deal with very little issue and two they usually have good contacts when it comes to real estate agents and contractors.

I recommend starting your search with property managers or agents as they're bound to be well connected. Happy hunting!

Eric Smith · Answer

I just can't get over the taxes there.  I'm a Binghamton native and for sentimental reasons have researched the area for investments.  I would love a reason to go back periodically! What I've found just reviewing MLS indicates you'll pay 3X more in taxes than your mortgage in a lot of situations.  That's tough to swallow but I'd love to hear people's experiences.

Thomas Wurfel · Answer

Hi @Fiona Lam !

I currently invest in Binghamton and would be interested to hear on your developments and if you found a PM to help you out. Keep me posted!

Christopher Stanis · Answer

Hey @Fiona Lam. Welcome to the Bigger Pockets Universe. We're glad to have you.  I have a somewhat similar situation as yours, since most of my rental properties are in Williamsport PA, a 2 hour drive from Binghamton. Where my side is easier is that my brother lives closer to our rentals. Still, I try to stop and see them or work on them 1-2x /month.

Also, @Robert White is correct- we have a pretty fantastic REI club up in BInghamton. We meet the 4th Tuesday each month- next meeting is June 28th, meetings usually run from 6-8pm. Send me a personal message with your email, and I'll add you to our mailing list!

Fiona Lam · Answer

@Eddie T.  - I agree, every month would be too much, but I certainly can do every few months.  That's certainly not a problem.  Thanks for the input.

@Robert White - Thanks for the information!  I will certainly try to make one of the gatherings during the summer.

@Travis Beetler - Thank you for your feedback.  I'm currently compiling a list of questions that I want to ask.  Finding a good property manager is one of my highest priorities at the moment.

Travis Beehler · Answer

I invest out of state, and I cannot stress how important it is to find a good property manager.  Ask tough questions, trust your gut, etc.  As for contractors, if you've got a good property manager, they can point a few your way.  Investing out of state requires a great deal of trust, and if you find the right PM, they are worth their weight in gold.

The one that I have I sent an expensive bottle of scotch when he pointed me to a deal that has really catapulted my investment returns.

Suggestions on how to begin investing 3hrs away?

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