Anyone have experience with doing a rehab on a long distance property?

[Marc Shin]

Hello, Anyone have experience with doing a rehab on a long distance property?  I live in Virginia and looking to purchase a duplex in Texas. The duplex needs about $25K in work (update flooring, update the kitchen, update the bathrooms, paint the walls).  What are things i need to consider when attempting to re-hab the property when it's a long distance?

[Jonathan Greene]

Why are you doing this? Have you ever done a rehab nearby? What's your experience with any rehab on properties at all? Are you using a realtor and do they have recommended contractors?

The worst thing you can do is to choose one contractor and use all of their subs out of state. It will be easier, but you will pay 2x-4x more than you would if you were local and on-site watching.

What's your plan for watching the rehab? Who are your boots on the ground?

If you haven't seen it and the estimate is 25k, it will be 50k minimum. If someone tells you it's a 3-month rehab, it will be 6-12 months.

[Russell Brazil]

Long distance rehabbing is the riskiest thing one can do in real estate. 

[Chris Seveney]

@Marc Shin

Make sure to double whatever they tell you it will cost and take 2x as long and then have someone to come repair all the shoddy work that was done.

Hopefully you have working bathrooms otherwise you may have some surprises hidden behind your walls

[Julie Muse]

So, I do renovations all over the country. And, to this day after all those deals things come up where I have to go to the property. If you are not a seasoned investor, I would not suggest this.  I wish you all the success and I want to say that before I make this next statement. 

If the property is a duplex and assuming they are 2 beds 1 baths. There is no way you can do this renovation for $25k. That is 2 separate kitchens and baths.  If you are just doing a refresh as you mentioned. You are looking at minimum of $38,000. Thats if all the HVAC are in good conditions and roof. 

Get your real estate agent involved now to determine what product quality you are looking for. Check to see if they are well and septic or city water and sewer. Pay for a home inspection and cross reference your bid with that. Remember, you always fix whats wrong before you fix whats ugly. I would also get a WDO. Your due diligence is the most important thing. Having unexpected surprises will destroy you. 

[Andy Sabisch]

Finding quality trades people today has become a challenge . . . the good ones are booked and the bad ones are plentiful.  Dealing with that on a local level where you have eyes on the project and the ability to deal with issues early and if needed legally is 100 times easier than doing it long distance.  If you are not familiar with the area (selecting a location because property is cheaper than your home base), often that great deal might be 10 blocks in the wrong direction and you get burned.  Then finding quality contractors - with which you do not have a track record is another hurdle.  We are lucky to have contractors we use regularly locally and get bumped up in the cue when we need work done because they know we are here for the long haul and will keep bringing them business.  Hitting someone cold will not give you that leverage.

As Russell said, investing long distance is extremely risky without an established crew and contacts in the area you are looking.  It is easy to get burned locally . . . imagine how much easier it is investing 500+ miles away!

Think long and hard as to why you are looking long distance.  The real estate training gurus say that investing in your backyard is no different than investing across country but what is said often is far from the truth.  Looking solely at price is a sure fire way to lose big time.  It is always amusing to hear people say I am going to invest ing (name a town) because there are no other investors there.  Guess what, every town - no matter how small - has investors looking at doing flips and BRRRs . . .

Good luck - just do your due diligence before jumping into long distance flips.

[Mike Morgan]

Quote from @Marc Shin:

Hello, Anyone have experience with doing a rehab on a long distance property?  I live in Virginia and looking to purchase a duplex in Texas. The duplex needs about $25K in work (update flooring, update the kitchen, update the bathrooms, paint the walls).  What are things i need to consider when attempting to re-hab the property when it's a long distance?

 One of the most important things to do is Build a team. Find an agent experienced in working with out of state investors. They should have contacts for service providers for you to interview. We like to give our clients 3 different contacts for each type of providers. 3 contractors, 3 Property Mgr's and so on. If out of state investing is an avenue you would like to explore further, I'd be happy to chat anytime. Feel free to reach out.

[Jacob Sherman]

best is to connect with a realtor and get some contractor recommendations as well as 3 off of google with good reviews and go from there 

[Mya Toohey]

Well, I am in the Tampa Florida area but the rehab amount for something like that seems low.  I would get a contractor that will get you a price for you.  DON'T trust a 3rd party on the price unless they have a scope of work from someone qualified to do the job to ensure the quote.  if you don't, you could be way over and that will mess up your whole strategy of a positive cash flowing unit.

[Sarah Kensinger]

We hired someone to oversee work done on a property that was out of state, and it wasn't even a rehab just a list of projects and maintenance. It's too risky otherwise!

[Joseph Bui]

For me, the first step is putting together or finding a good team end to end before finding a property. You need someone to help you with finding A property, rehabbing, project managing rehab and property management. I’m based in Seattle but have done and continue to do out of state rehabs in the Midwest (Memphis and Detroit) because I was able to find trusted teams that help me end to end. Happy to connect and knowledge share if you are interested. 

[V.G Jason]

I have done over 25 in about a year or so. And this is just as I enter the REI space, so no prev experience managing these types of things but lots of experience managing people and businesses prior.

It's the only way I really enter the market, but I underwrite for these things financially & time wise. And I don't see myself changing this. 

It's one of the riskiest things to do, for sure. Make no mistake about it, if you aren't ready for the **** it'll bring I recommend to do something else. 

[Greg Parker]

Yep, get that team together, the core 4.  Have them give you contacts/referrals for some of their OOS clients, and ask them how it is going.

If "anyone"asks for money up front, move on.

[Christina Swaby]

We just finished up our first long distance fix and flip. Closing on July 3rd. I found the long distance real estate book from Bigger Pockets to be helpful. It provides insights, email scripts, and things to look for when building a team long distance. From that I was able to find a great realtor and a duo general contracting team that has been very reliable- chatting with them almost daily and doing a video walk through once a week. They'll be working with me on my next one (looking at other houses now.) I also joined a local facebook group where I was able to source things like lawn mowing. 

I will say we have family connections to the area we are targeting and we go up there 2-3 times a year in general. And we have the ability in life to hop up there (it's almost 1000 miles from us) should we need to. If we didnt have these things I'd be hesitant to get started in long distance.

[Allan C.]

@Marc Shin I spent 10 years doing renovations myself and a few years renovating in local markets with contractors before doing long distance renovations.

My first LDR was from 2000 miles away (same time zone) with $150k budget. Then I tried a LDR 8000 miles away (15 hr time zone diff) and $300k budget.

My learning is that I won’t do a renovation more than 1 time zone away. I also no longer take on large scope for LDR anymore. I still complete 2-3 LDRs a year, but those are only for stabilized smaller assets where I have a trusted team that I’ve worked with for 5+ yrs. Too much risk with low quality contractors these days, or alternatively you have a big hassle factor. Neither are worth it.

[Ivan Terrero]

@Marc Shin

I did, after doing 5 locally, the long distance rehab cost me $65 k loss .....never again

[Drew Sygit]

@Marc Shin "when the cat's away, the mice will play"

Appropriate saying in regards to remote rehabs.

As soon as most contractors figure out they aren't being properly managed because you aren't able to go to the jobsite regularly:

1) They will take a long time to get things done

2) Quality will suffer

3) Highly likely to over-charge

4) Highly likely to "create" more work for themselves

5) Greater chance of billing you for work not done and materials they use on other jobs

Can be done if you know what you're doing & have resources to check on them.

Many are posting to ask an agent for contractors, but a PMC is usually a better choice.

[Marcus Auerbach]

We strongly suggest to our OOS investors to buy something that needs paint and carpet at the most. And after they have worked through that they are usually glad they did not take on more.

I have been BRRRR-ing for 15 years so I have done a few and we have a crew, but if we don't show up on a job every other day things go sideways.

Also, 25k will not get you far, even in Milwaukee. It adds up fast. A good ballpark number for a duplex is 25k per unit and 30k for the exterior (if it needs it).

[Robert Adams]

Maybe consider partnering with an experienced investor in the area. You can still make a profit and eliminate a lot of the risks of not being there because you will have a partner with boots on the ground. You can also cut your costs and leverage for other deals. You would also be able to leverage that partners local network for Realtor, contractors, etc.

[Tim Ryan]

Who's the contractor?  Why Dallas?  So many questions.  I actually have the answer to this.  The key is to focus on one market and go there often. Meet people who will help you with your investments. Get referrals to contractors by trusted new friends. Only way to do this is to get involved in the market.  Making calls from out of state won't do it.  I can say a lot more about this if you are interested but I think I'll keep it short here.

[Lucia Rushton]

@Marc Shin where in Texas?