How to get started flipping as a OOS Investor?

Question

Hello all, I currently reside in Northern Virginia, recently relocated from NYC. Just finished selling my primary home in NYC which I had for 5 years and appreciated nicely. Made about $150,000 in profits. I now will have around $200,000 in savings. I’m looking to flip and fix out of state in areas such as Cincinnati/Dayton, OH. I am interested in buy&hold as well but want to give flips a shot. My main concerns/questions are:

1) What are the steps I need to take and also how do I even go about finding homes that can be flipped for profit in a market I have no idea about.

2) How to determine ARV in a market I know nothing about? (This questions probably ties into question 1)

2) How to estimate rehab cost when I don’t know anything about construction.

3) How to make sure all this goes smoothly as an out of state investor.

Aimee Parker · Answer

@Eric DeVito, I agree fully with what Brian G. said.  Doing this remotely would be quite the challenge.  Flipping in Ohio is getting harder and harder to find the right properties/conditions to turn a profit.  Any good listing is gone immediately - Columbus just posted an article that the Columbus MLS was the TOP city in the US right now for real estate transactions, with average DOM only 5! I think many good flipping opportunities are found off-market with distressed owners needing to sell quickly, and once again much of these won't be published.  Trying to meet with these potential Sellers and viewing their property in person would be nearly impossible states away.  I too suggest finding someone with boots on the ground to invest capital with to share profits.  Buy & hold could me much more lucrative for an investor willing to take that approach.  I am in the Title business, and can assist with getting you to the closing table, and assuring you are getting clear title on a property.  We can close anything in Ohio.  I am also happy to steer you toward contractors, insurance agents, property managers, Realtors, etc for you to consider.  Best wishes in Ohio - it's a fantastic market here right now!

Aimee Parker · Answer

@Eric DeVito I would definitely market such a post on here, describing what you are seeking and offering.  It could take some time to interview and/or meet with potential partners, but I would say time well spent.  I have met several business colleagues here, that were legit with their business and success! I can suggest a good person in a Columbus suburb, that does the rehab work himself (and subcontracts out what he needs to) but is also an investor himself.  We have done past business together where I have teamed with him with out of state partners. Shoot me a message and I can introduce you.  I potentially have someone I could suggest in the Cleveland suburbs area as well. Met him on BP and doing a closing for him as we speak!

Joe Aiola · Answer

@Eric DeVito congrats on the sale! Appreciation can truly build wealth quickly. Here are my answers to your questions:

1) Start by reading David Greene's book on Long-Distance Real Estate Investing. It will give you a good foundation and get you started.

2) Real estate agents will be able to help you with this - just make sure you talk to a few and find one that works with flippers.

3) Talk to investors in the area. You can also call contractors in the area to get ballpark figures. Not all will be willing to give you blind estimates, but some will and it will give you a good starting point with the rehab budget.

4) Be clear on your scope of work to avoid mistakes and have a good team - good contractors (use Facetime often to check in on them), good agent / property manager / supervisor that can check on the property for you and send you pictures of the work. David Greene's book goes into all of these questions in detail.

Hope this helps - best of luck!

Eric DeVito · Answer

@Jonathan Greene I understand what your saying. I’m working on talking to a investor friendly agent over the phone first to talk about my plans and see if they can help me. I am looking locally but it is hard in this market in northern Virginia to buy in. Ohio markets a lot cheaper to get in the investment game.

Jonathan Greene · Answer

Very solid advice from @Joe Aiola. David Greene's book is a great overview before you leap too fast. You have to build relationships in the area with all of the providers, the most important being your investor-friendly agent. You want to visit the area you decide on and spend a few days getting to know people face-to-face. When you do OOS, especially as a newer investor, you often trust too much and give over too much control because of things like "not knowing anything about construction." Think of that, just for a second. You want to flip a house, out of state, where you don't know anyone, and you don't know anything about construction. By itself, that is a recipe for disaster. That's why I would say you might want to meet some local flippers and befriend them to see if you can swing by their jobs or get to know some local contractors and learn, even if you don't want to invest where you are. With that said, if you moved from NYC to Northern VA, why not invest where you are? There are flip deals there for sure.

Michael Reisman · Answer

@Eric DeVito

I agree with the above posts and want to emphasize the importance of creating a good team. Interview many professionals (agents, contractors, etc) in the area and talk to investors who own property there. Making sure you can trust the people you will be relying on is so important.

Adriel Hsu · Answer

This will be tough, but defintiely doable.

I suggest visiting the market at least once before deciding to flip there. Know the desirable neighborhoods.Find a realtor that will run accurate comps for you. Most tend to over estimate ARV

Rehab costs vary by market. Find a GC since you'll be out of state, but just realize you will definitely be paying a hefty premium having someone else manage your rehab vs sourcing your own subs. Be prepared to hire and fire numerous contractors until you find a good fit.Having a boots on the ground you can trust is really the only way to ensure it runs smoothly.  Preferably a third party with no conflicting interest like a realtor/contractor.

Brian Lynch · Answer

Finding a great general contractor would be my number one priority. I would demand that the contractor send a daily video update so you can track progress of the flip each day. I would also arrange a surprise visit during a flip until you are 100% sure you can trust your contractor.

Brian G. · Answer

@Eric DeVito man if I’m you, I’m looking for a boots on the ground partner (ie rehabber, flipper with his own crew) who will do all the work while you provide the capital. I think a profit split of some kind (50/50?) would be the best way to incentivize your partner and is the safest way to protect your capital. You will give up more profit this way but if you find the right partner this can lead to many profitable deals and longterm success. Beware. I’ve read that managing a remote rehab is the riskiest thing one can do in RE. I *think* it might of been said by @Jay Hinrichs if I’m not mistaken and everything Jay says should be taken seriously given his experience and success.

Zeke Liston · Answer

I agree with all of the posts here, a good team is crucial! Also, congrats on the sale @Eric DeVito!

How to get started flipping as a OOS Investor?

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