How to lightly rehab buy and hold properties from out of state

Question

I've found a market that meets my investing appetite and offers the kind of returns I'm looking for. A lot of the properties I'll be looking at are REO's and will almost definitely need some work to get up to code and in rent able condition. What is the best way to accomplish these repairs and updates from 2500 miles away? I will be flying out to look at properties and a property management company I spoke with says they are willing to do walkthroughs and give me rough estimates. I've since become skeptical about property managers and wonder if it may be better to make contact with a local GC who is willing to do the walkthroughs or what my best option may be. I know GC's should probably fall under the same skeptical category as PM's, but just fishing here.

Dean Letfus · Answer

"You have to have a GC that you can trust"

If you are not on the ground yourself I would say this is more or less impossible. In Memphis especially.  Get a local to manage rehabs for you or don't do it. We get taken advantage of often and we live here and can drive rehabs daily.  Doing it remotely is a bad idea.

Haim Mamane Palman · Answer

Hi Matt,

I did exactly what you are trying to accomplish. I live in San Francisco, CA and purchased two REO properties that needed light remodel in Memphis, TN.

It's been challenging to say the least. Mainly because that I didn't hire the right GC for the job. You have to have a GC that you can trust which as you can imagine is VERY tough to find.

My suggestions:

- Try to find a partner on the ground to help you manage the project. The partner should not have only something to gain but also something to lose if things go sideways (i.e. "skin in the game"). Local real estate agent or partner GC can be good options.

- Network with local investors and ask them for GC referrals. Verify the GC license and insurance and ask them to provide a sample of Scope of Work for similar projects

- structure your contract with the GC that the payments are contingent upon successful completion of milestones to be inspected by a third party such as a home inspector.

Overall, it was not the most pleasant experience, I did a lot of mistakes for sure but I learned so much and I don't regret it.

Zechariah Evans · Answer

Matt,

I'm with Michael Jons & Associates A local GC If you need any help looking at properties or any recommendations for subs we use feel free to ask.

Also check out Angie's List for reviews, Unfortunately we are new to BP and have not worked with many local investors.

Ramon Jenkins · Answer

Matt, please keep it on a low key for now

Just kidding

Matt Morgan · Answer

@Dick Rosen I appreciate your willingness to help but although I live in Phoenix, I'm actually looking to invest out of state. As I'm sure you know, the Phoenix market is bananas. Have you been having any success here?

@David Beard Thats great advice. I've actually contacted a member on here to try and partner on some future projects in that sort of capacity.

@Stephen Masek I may have gone a little overboard with the 2500 miles guestimation. I'm actually looking to invest in Milwaukee, which is in fact only about 1750 miles from Phoenix.

Marc Lapointe · Answer

I actually do rehabs for a company in cali that purchases homes in ny and nj and they tell me it is extremely hard to find honest contractors. I give them a fair number to rehab all there properties and get a lot of work from them. I suggest you interview 5 different contractors and ask for references. In the end it will pay off.

Jeff S. · Answer

A good PM may do it for you. Sometimes you just have to hold your nose and open the wallet.

Around the condo community we hire a consultant to watch after the contractor. The consultant is just another contractor offering consulting services.

Stephen Masek · Answer

2,500 miles from Phoenix?  Hartford, CT?

The local apartment association may be another source of finding good vendors.

David Beard · Answer

If you let investors here on BP know what market you will be investing in, then there is a very good chance that someone will be willing to assist you with trustworthy contractors and property managers, maybe even an occasional drive-by of your property.  Still have to do your due diligence, but would be a good start.

I would also consider plugging into the local REIA, even though you can't attend meetings, you can get the membership roster, see who their recommended vendors are, etc., and start to network that way.

Dick Rosen · Answer

@Matt Morgan I am a Property Manager in the Phoenix Valley, preferably East Valley. Because of my fix/flip, buy/hold background, I specialize in under managed under performing properties. I have a list of subs that I use for various things and generally manage all projects myself. I'd be happy to work with you if you decide to go this route.

How to lightly rehab buy and hold properties from out of state

Most Popular Reply