Long Distance Investing as a Beginner

[Rob Bianco]

I'm living in NYC but I'm highly interested in investing in rental properties that would provide the best cash-flow out of market. I've been reading a lot about Raleigh, Columbus, and Milwaukee. I'm wondering if I'm better served finding a turnkey provider or making multiple trips to the area to house-hunt with the help of a real estate agent and then find a great property manager to oversee things. 

[Jody Schnurrenberger]

I also invest out of state--Auburn, AL.  I think that even if you have a turnkey company, you'd do well to have visited the city first, and preferably the houses if you can get there fast enough.  I've heard rumor that some turnkey companies aren't reputable (as in every industry) and will sell you things in a war zone type of area, jacking up the price so you don't even realize what you're getting.  If you visit the area, you can map out the locations you are interested in, visit the PMs you are considering using, meet with agents if you decide to go that route, etc.  

I encourage folks to invest where they have friends and/or family so when they to visit their property (which should be done at least annually, even with everything done for you), they have a free place to stay to cut down on expenses.  Also, if there is a hurricane or tornado, the friend or family member can drive past the property and give a basic report much faster than the PM can as they may have hundreds of properties to check on.  

When you are picking a PM, be sure to read the management agreements before making a final decision.  Also, make sure they handle everything you think you might want to get into.  For example, I've decided to start investigating Section 8 properties.  Well, my current PM doesn't do them.  Now I need to find another PM.  I'd rather have everything under 1 roof, if possible.  When looking for other PMs, I read one contract that specified that they charge 8% or $100, whichever is higher.  If I'm renting out a low income place for $500, I'm overpaying with them.  The other 2 agreements I read charge a straight 8%, no matter what the rent is.  Also, the required insurance in my agreements ranged from $300k to $1M, so that might play into your decision as well.  Basically, read the agreements before making a final decision.

Good luck!  :-D