Distant Investing: Buying REO's For Flip/B&H

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Distant Investing: Buying REO's For Flip/B&H

Steve M.
Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes

Hey Everyone,

So far, I only have experience investing in the Memphis, TN market (buying my first duplex just 3 weeks ago). Although its a great market right now, I don't want to put all my eggs in the same basket, and would like to diversify my very small portfolio to date :-)

Been looking at the Indianapolis, Ohio, Texas, Missouri, Atlanta, and Las Vegas areas over the past week or so.

My question is this. For those that buy REO's that need rehabbing in area that atleast 500-1000+ miles away, how do you go about finding decent contractors, and taking care of business in general.

For instance, if I found an excellent REO in Las Vegas, that can be purchased at $25k, and need roughly $10K in rehab (from pictures seen) what would the next steps be? Also, has anyone ever completely purchased, rehabbed, and either flipped or B&H, never actually seeing the property in person without the help of an investment group, etc...?

Appreciate it guys and gals!!! :-)

-Steve

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Ted Harris
Real Estate Investor · Portland, OR · Member since 2009 · 660 posts · 244 votes
16y


I'm in the middle of a Vegas project ... bought a SFR REO for $42k two weeks ago and having $5600 worth of work to get it rent ready. Got house under contract site unseen (except for pics) after 11 previous offered were rejected ... my agent (who lined up the handyman) saw this house. Once I had it under contract, I flew down to view and approve. Work is supposed to be done this weekend then I plan on finding a tenant using lease/option (agent also working on this) .... agent is my conduit for lining up house, handyman and hopefully a tenant. So far, things are progressing as planned but still need to find a tenant which could be difficult this time of year. Bottom line, find a good team or pt person whom you can trust to handle your out of state investments. Then, rinse and repeat .... :D
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  • Ted Harris
    Real Estate Investor · Portland, OR · Member since 2009 · 660 posts · 244 votes
    16y


    I'm in the middle of a Vegas project ... bought a SFR REO for $42k two weeks ago and having $5600 worth of work to get it rent ready. Got house under contract site unseen (except for pics) after 11 previous offered were rejected ... my agent (who lined up the handyman) saw this house. Once I had it under contract, I flew down to view and approve. Work is supposed to be done this weekend then I plan on finding a tenant using lease/option (agent also working on this) .... agent is my conduit for lining up house, handyman and hopefully a tenant. So far, things are progressing as planned but still need to find a tenant which could be difficult this time of year. Bottom line, find a good team or pt person whom you can trust to handle your out of state investments. Then, rinse and repeat .... :D
    1Reply
  • Ted Harris
    Real Estate Investor · Portland, OR · Member since 2009 · 660 posts · 244 votes
    16y

    I should add I did quite a bit of research and due diligence before finding my current out-of-state contact which included ....
    * 3 trips in the last 6 months to Vegas to meet prospective contacts
    * let 2 previous agents go after they proved 'ineffective'
    * called references and checked with BBB and local real estate board
    * met in-person twice and spent significant time with them including looking at properties to make sure we were on the same page
    * had many, many email and phone conversations

    In other words, you will probably need to visit your out of state investment area a couple times as well as make many phone calls before you can feel comfortable and have a good team in place ... at least, that's been my experience.

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  • Steve L.
    Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    16y

    Steve, I understand where you are coming from, but I think the strategy doesn't make sense.

    People from all over the country invest in places like Memphis and Indianapolis. You're on the ground in one of the best places to invest.

    You can do so many things that out-of-state people can't. Go view 10 properties a day, know the good neighborhoods from the bad, drive to your property, manage a rehab, meet potential tenants, be there when stuff goes wrong. You don't have to do any of this stuff, but at least you can easily if you need too.

    I would highly suggest you invest in your home turf and worry about diversification once you are 30-40+ properties deep.

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  • Jim Wineinger
    Real Estate Investor · ten mile, TN · Member since 2009 · 1k+ posts · 374 votes
    16y

    Steve, let me try to answer you question in this regard. You currently have home owners insurance form a certain company. Should you have to file a claim due to fire, vandalism, ect., who would they use or suggest you use to fix the damages?

    This same question can be posed to them (especially if they are a national company) for them to get an answer from their office nearby your proposed purchase.

    This should give you a reputable company or two in that area for repairs.

    The same type questions may be able to be asked to RE companies like REMAX, or Century 21, ect. and if the same names come up you should be able to trust them.

    But I am also in agreement that it may be best to stay in your market to get a few deals under your belt. This will give you a feeling for those companies that are just giving you a line when you speak to them long distance.

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  • Steve M.
    OP
    Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
    16y

    @ Ted ...

    Wow ... You have way bigger cohonas than I do. Site Unseen -- Not sure I could do it :) Excellent Points on doing DD ... I like the way you think! Appreciate the post!

    @ Steve

    That really does sound like a strategy I should stick with to start. I have (for the most part) stopped looking to other parts of the country and am now focused on Memphis, and other parts of TN (my backyard). Appreciate it Steve!

    @ jawsette

    Excellent Points jaw! Will keep them in mind!

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