Buying rental properties when not located in the local area?

Question

Hi all,

First time poster - been listening to the podcast which has been great.  Many people who I hear on the podcast or read articles on are very familiar with the areas they're buying rentals in as they more than likely live in the area.

Unfortunately for me, I live abroad at the moment - though originally from Seattle.  I'm wondering options there are for investors like me?  My strategy would be buy, remodel, rent and hold rather than flip them - looking at the cash flow instead of depending on appreciation.

It would be difficult to manage a purchase of a property from a broad and tenancy agreement, but even more difficult to manage a remodel!  Thoughts?

Thanks!

Bob E. · Answer

Account Closed   We live in phoenix and have done rehabs in Mi, IA, WI and IN, most of the properties we did not see before purchasing because we were buying defaulted notes so we could not get in before we foreclosed.  This can be done but you need to have good partners that are local, get a rehabber and realtor that can walk the property and and give you a rehab estimate.

We now partner with a wholesaler that looks at the property, inside and out and does the rehab for us and split the profit when the property sells, we have a strong relationship that works well for us and we are happy with the results.  We structured our deals a few different ways, 1)  in our IRA where we funded a mortgage to purchase with a profit split, and 2) directly purchasing the property in our name with a profit split.

Account Closed · Answer

Thanks Ali - re price range:  I can put maybe 100k down for right now.  So that could be buying 1 property outright or multiple properties with a mortgage - still debating.  I don't know the cost of turnkeys in certain geographies so I'm still trying to weigh things out and model it.  Need to understand which turnkeys geographies have the best locations - is there somewhere with this analysis?

Account Closed · Answer

Hi all - following this up - I went on vacation then I simply forgot about this post. I'm now trying to get in gear with a goal of buying a property this year.

What websites do you recommend for buying turnkey properties?

I'm open to any geography for buying turnkey properties - but I'll need someone to manage it as well.  Any suggestions are appreciated.  Thanks!

Sterling White · Answer

Welcome to the site Account Closed stated in addition to that there's crowdfunding(where you can own a slice of a deal).

Have you looked into markets that offer what you're looking to achieve, Darryl?

Ali Boone · Answer

The turnkeys come with management in place (at least they should if they are really turnkey in the capacity you are talking about them). As far as where to find them, what price range would you be looking at? Different markets and providers and such will offer different price ranges, property types and styles, returns, etc. So some of it depends on what you are looking for. Happy to direct you. I work with turnkey providers all over the place.

Account Closed · Answer

Hi Darryl L, I'm in a similar situation, but not abroad.  I lived in the Milwaukee area until my early thirties, then moved out to CA ten years ago.  There's no way I could afford an investment property here (like Erin S. above, I live in Bay Area where property values are ridiculously high), so I recently bought a duplex in Milwaukee, in a neighborhood I used to live in/am very familiar with, and will hire a local property manager.  The property values in Milwaukee are still quite low.  Could you do the same in Seattle?  I don't know if you've been gone long enough for things to change greatly, and don't know what the market is like there.  Just a thought.

Anthony Taylor · Answer

Great post.

Bob E. · Answer

@Erin S.  We always try to align our interests with our partners.  While we have backed flips a lot of our purchases are rentals.  Some of the rentals we will hold, others we will sell to investors either with our without financing.  Overall we have a partnership where we all benefit when good decisions are made.

A defaulted note is a note where the borrower has violated the loan terms.  Usually that means that the borrower has started missing payments.

Erin S. · Answer

@Bob E.

You have a good system going. It seems more like you are the investor backing a flipper - is that correct? Sorry - I am extremely new to all this. A "defaulted note" - is that a house going into foreclosure?

Erin S. · Answer

@Darryl l.

I am in the same boat - although not abroad. I would like to buy, fix up, and rent out a property but I can't afford another house where I live. I am not sure how I would do it yet, but I am thinking of buying down in Southern CA where it's more affordable than the Bay Area.

Buying rental properties when not located in the local area?

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