Scaling out of state while busy working my W-2

[Sean Gallagher]

Bit of a crossroads here, I'm hoping someone with a similar situation could chime in. I'm really busy with my w2 job working all the time to fund my investments. I've been buying SFH's out of state all cash as long term hold rentals. A smaller paid off portfolio seemed a lot easier to manage so that is the path I was on.. but I've come to the realization if I ever want to accumulate serious wealth I will have to use leverage and scale big. How are you able to scale big when out of state and super busy? My estimation was with leverage I could do about 7 homes a year and each year after it would increase. Soon I would be doing a home a month+. Trying to wrap my head around this being feasible while working so much at my w2. My involvement would go down drastically to where the only thing I'm doing would be funding the deals.

-Do you have a property manager that you turn the home over to after purchase and they take care of everything?  

-How much involvement do you have? 

I imagine this isn't cheap but I don't see another way.

[V.G Jason]

Great question, but there's a bunch of ways to do this. No need to share your income, etc., but my recommendations.

1) Get deeper before you get wider. Meaning get deeper in certain cities, before you go to more cities. My recommendation, depending on income, is to get 2-8 total properties per city and really allocate 40-60% of your intended investment before moving to the next city. Depending on local regulations, you can mix up STR/MTR/LTR.

2) Get systems in place in those exact cities; 2 PMs preferably via NARPM, 2 high quality inspectors, and rotating book of handyman, 1 lawyer, and a credit union contact for leverage along with investor friendly nationwide lenders. You will defer your house to these systems in place, but it's your job to keep check on them. They don't care about your property, to be frank. Have 3 quality lenders per investment property, this keeps them honest.

3) You don't need to go all cash or 80% LTV. Why not a mix? 1.25-2 DSCR per property is healthy, and keep cash set aside of reserves per property. That'll be likely 28-40% downpayment. This is going to keep your bid honest, rather than lazier and keep your cash position stronger.

4) The only time you spend in this, is finding & closing on the quality assets and playing devil's advocates for repair/rehab/fixing costs. Everything in between, someone else does that is professional, licensed/insured and has warranty where it's applicable.

I operate in nearly a dozen cities, multiple properties in all besides one, and these are my systems in place.