A newbie looking to start with long distance investing!
Member since 2020 · 1 post · 0 votes
A newbie looking to start with long distance investing!
Most Popular Reply
Member since 2020 · 3 posts · 6 votes
6y@Gabriel Isedeh, welcome to the community. I own a number of rental properties that are a few hours away from me (by car). I hope my thoughts will be helpful for you:
Before Getting A Property Manager: Learn to Manage Your Properties
I agree strongly with @Joe P. - if at all possible, start with a nearby place that you can manage yourself. When you're managing a property correctly (ensuring it's in very good shape before a new renter comes in, picking excellent renters, attending to problems quickly) you will learn both how smoothly things can go, as well as how difficult it can be when an unexpected problem emerges. Do this for a year. Maybe two. Get a feel for how long things take, how much things cost, how difficult it is to find good vendors.
(To clarify: I don't mean you have to do all the work yourself. You don't need to be the plumber and landscaper and painter and electrician etc. But you need to manage all those people, pay them, supervise their work)
At this stage, the most uncomfortable thing about managing the property will be your ignorance. It will be a steep learning curve. You'll probably feel some anxiety about the next thing you'll have to figure out. Good. You're learning.
At some point, you'll stop feeling anxious about having to solve new problems. It's not that you will have encountered all possible problems (hello, COVID-19!), but you will develop your general approach and landlord common sense.
At this stage, the most uncomfortable thing about managing the property will be the time it takes. It's not exactly difficult - you know you can handle whatever the property throws at you, it just takes time to do it well.
When you're at that point (and not earlier), you can think about getting a management company. You're essentially trading your time for money (which is generally what money is for, in my opinion). But you only do this when you are able to meaningfully supervise their work, by being able to say things like "THIS problem needs to be addressed within 12 hours, and THAT problem can wait until next month" or "Please explain the cost breakdown for this maintenance service, it seems a little high" or "I'd like to also see a quote for the same washer/dryer combo with a 5 year warranty".
While Getting A Property Manager: Finding a Good Management Company
Frankly, it's a neverending quest. They can start out good and go bad. You just never know. Be ready to jump to a new management company.
I am now using two management companies (each managing different properties), essentially to have redundancy in case (when) one of them stops functioning at an acceptable level. I picked each one carefully, as though it's the only one I'm using. I accept the slightly higher management fees as the price for having the peace of mind.
Here are some tips about finding a good management company:
- If you know anyone who owns rental property in the area, ask them.
- Go on Yelp.com and search for "property management". Look only at reviews by property owners (not from renters). Note the good and the bad.
- Send a message to users who left a bad review. Thank them for the heads up, explain you're looking for a management company, and ask them if they've found a good one since.
- Still on Yelp.com, search for real estate agents that don't manage properties. Look for ones that consistently get glowing reviews. Contact these agents and ask them to recommend a management company. Real estate agents live and die by their reputation.
- Learn how to interview management companies. A lot has been written on this already, so I won't repeat it.
After Getting A Property Manager: Stay Connected to Properties and Tenants
Once you hired a management company, the fantasy is that you can kick back and watch the money rolling in. And, you know, it doesn't have to be very far from that. But you still need to put in some work. Remember, if your management company is charging you 8% of your gross income, every $1,000 of rent you earn translate into $80 of income for them. They're just not motivated the same way you are. You miss a 2 months' rent because the unit is sitting empty? Big deal, they lost $160. They'll still get a full month's rent in commission when they place a tenant.
One of the worst things that can happen is for your property to sit empty. You have to stay on top of the property manager's timeline for renewing leases, advertising upcoming vacancies, preparing units for new renters, and signing leases. Different companies have very different practices. Listen carefully to how they explain why they do what they do, consider it, then decide how you think it should be done and insist that they do it. They work for you. But you have to supervise.
A far worse thing that can happen is for your properties to deteriorate without your knowledge. By "deteriorate" I mean suffer horrible damage like holes in the roof, water damage throughout the walls, infestations throughout, sewage flowing freely. By "without your knowledge" I mean that you have absolutely no clue. Nobody tells you. If you're lucky, all you know is that tenants stop renewing, and you can't find new ones. If you're less lucky, you get sued.
It's not easy to stay on top of your properties. Good management companies, like good pet sitters, will send you photos every once in a while. But even that is very partial information. And unless you're going to pay someone else to inspect your property occasionally, it's hard to know how it's doing.
The solution? Keep in touch with the tenants. THEY will tell you whenever there's a problem. Maintain boundaries: When they tell you about an issue, ask if they already contacted the property manager. If they didn't, that's what they should do. But if they did, three times, over the past two weeks, and nobody got back to them - well, you should know about that. And apologize. And set it right. It's their home, and it's your investment.
There are a couple of ways to keep in touch with tenants. Whenever a new lease is signed for any of your properties, make sure your management company sends you a copy. That's just good sense, and can come in handy for other reasons. Also ask them for contact information for all tenants (phone and email).
Then introduce yourself to the tenants (email is fine). Explain you want to make sure they're happy in their home. Explain that the property manager is the first point of contact, but that you're there in case they aren't happy. And for the love of all that is nice about this world, mean it when you write it, and keep meaning it afterwards. Then, check in with your tenants every 1-3 months. Just a quick "how's it going, anything I should know about".
So, there you have it, in three easy steps:
1) Manage yourself
2) Hire a manager
3) Supervise the manager
I hope this helps.
36 Replies
- Member since 2020 · 1 post · 0 votes6y
Me too! I'm in Canada and want to invest in rental properties in the Philippines.
- Investor · Grey Bruce Ontario · Member since 2020 · 11 posts · 5 votes6y
Hi Gabriel,
I am 5 hrs drive from my rentals. Before I stated to travel cross country for my job I managed them with the help of my real estate agent. It worked well until we both got too busy and a tenant cost me $15,000. I recommend for long distance you get a REALLY good property management company and then WATCH your monthly statements like a hawk! I have built a good relationship with my Prop Manager and they know if I tell them they made a mistake that I am usually right.
Dave Ramsay recommends not purchasing investment property that is over an hour away. This is good advice for anyone, especially a newbie. Learn the business before you complicate your life and incur costs you may not be able to control. If you are close you can drive by to watch over the property, you can stop and get to know the neighbors and hear any complaint or praise, ** and you can check up on any work that was done or that CLAIMED to be done**.
- Lender · Chicago, IL · Member since 2020 · 53 posts · 30 votes6y
Hi @Gabriel Isedeh, always glad to see more people join the real estate market! In terms of OOS investing, like many have already mentioned, it'd be really important to find a good, trustworthy PM. Make sure you really get to know the individual / team who you'll be working with! Read reviews, ask around etc. And even intuition & first impression are sometimes quite good indicators as well - there's nothing worse than working with a PM who isn't responsive or transparent about things. Hope this helps, or let me know if you have other questions!
- Rental Property Investor · MS · Member since 2018 · 67 posts · 46 votes6y
Finding a good property manager is really difficult. It's more difficult than finding a good deal for a rental property. I have a few out of state rentals, but my current property manager is retiring and I need to look for a new one soon. I feel like finding a good PM is like a trial and error. I've had a few failures in the beginning, but it's important to continue on your real estate endeavors.
- Specialist · Mortgage Broker Canada · Member since 2015 · 316 posts · 118 votes6y
@Gabriel Isedeh Excellent insights from all the above BPers. @Kim Holley I like Dave Ramsey's advice. The first property i purchased was right in my own backyard - it's now a rental and the other properties are about an hour away. Whether the property is an hour or five hours away, having a reliable team (property management, etc.) is key to long-distance investing.
- 6yChris HyltonPro MemberMoss Beach, CA · Member since 2015 · 27 posts · 13 votes
@Gabriel Isedeh - Welcome to the game and the site! I too am looking at OOS investing and have found that one of the most important things to have in place once you decide your market is a GREAT Team. Have you read @David Greene book Long Distance Real Estate Investing - it is just short of a step by step guide on how to do it. I found that the hardest part for me was deciding on the Market however the Market Analysis Tool on BP Insights was pretty Epic in at least providing some Guidance. PM me and we can chat some more - welcome again!
- Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes6y
@Gabriel Isedeh another vote to read the book on Long Distance Real Estate investing by David Green. Investing OOS requires a high level of education and skill. Be very careful. It can be done but the risks increase when you do it remotely, especially if you are trying to oversee any major rehab remotely. Ideally, find a boots on the ground partner that you can invest with.
- Columbus, OH · Member since 2019 · 78 posts · 66 votes6y
@Gabriel Isedeh
Building a solid team of professionals is definitely key. I would talk and interview many PMs, realtors, etc.
- Investor · Grey Bruce Ontario · Member since 2020 · 11 posts · 5 votes6y
Thanks for the referral to the book by Greene. I will be getting that one asap !
Kim
- Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes6y
@Gabriel Isedeh simple, connect with those that have done 100s and 100s and 100s of deals PM in place. 10- 14% net caps. All you do is close. Nothing for you to do . But make sure you have cash on hand, not have to borrow . Keep is simple ,so many research and research and never do anything .
Good Luck
- Investor · Greater New Orleans area · Member since 2020 · 16 posts · 5 votes6y
If you reach out to local realtors (find the highly recommended ones in the area via a web search), they can be a great resource for finding good property managers in the area, including a flavor of what you'll find in the area, names to reach out to, and probably names to stay away from, too. Also reach out to the local REIA. They have great information, as well, since they're already investing in the area and familiar with who's there and who does what, and does it well.
- Real Estate Agent · Phoenix, AZ · Member since 2017 · 47 posts · 34 votes6y
Hi Gabriel, I'm an agent in Colorado as well as Arizona. Because of the lack of good cash flowing deals in Colorado we opened a brokerage and property management firm in Phoenix which I manage. We cater to out of state investors and have clients all over the country purchasing properties in our markets. We find and analyze deals for you, as well as provide property management services and vendor/project management. This makes it really easy for out of state investors to invest in Colorado and Phoenix. We'll be opening new markets as additional opportunities present themselves. It will be tough (not impossible) to build a solid team consisting of an experienced investor-agent, property manager, and various vendor contacts for renovation and repairs. Just read David Greene's book Long Distance Real Estate Investing :) Message me if you'd like to speak further. Thanks -Mike
- Investor · IL · Member since 2019 · 151 posts · 135 votes6y
Be very careful. Be wary of anyone offering advise who has something to sell, real estate agents, pm's contractors etc. Keep a very close eye on every aspect of the deal. Stay in close communication with everyone. There is nothing "passive" about this type of investment. I inherited an OOS rental when my Dad passed, and it ate me up with fees and maintenance. It soured me on residential REI for a very long time and as a consequence it cost me a lot of money in lost opportunity.
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes6yThe main starting point is to decide how you'd want to do it. You can do it as risky and hands-on as you want, or minimal risk with less hands-on...and everything in between. For rental properties, here's some info-
https://www.biggerpockets.com/...
For flipping, similar concepts apply--you can do it as risky or least-risky as you want. The key is to know what strategies constitute what on the risk and effort scale. - Rental Property Investor · Los Angeles, CA · Member since 2020 · 35 posts · 19 votes6y
I found that Neal Bawa's free course helped me narrow down my preferred market based on publicly available facts and figures. As with any free course, please be careful of the upsell. Furthermore, you have to choose what factors feel most relevant based on the recent changes with Covid. Obviously you can create success in any market if you have the right team and insight, but I found this to be an important first step. Good luck!
- New to Real Estate · Rock Island, TN · Member since 2019 · 96 posts · 69 votes6y
Your best bet is to start with David Greene's book "Investing in Long Distance Real Estate". It is a great starting platform that explains everything. I have been following the advice from the book and have purchased 6 units out of state without even seeing any of these properties in person. The book's value is worth way more than the $20 it costs.
- Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes6y
Simple, connect with somebody actually doing deals versus reading books and going to seminars. Learn from them. Apply what you learn and then do it. Keep it simple. Stay away from books and tapes. Every single day I’m contacted by people that tell me they want to buy properties and all they do is research things to death and never do a deal.
just analysis paralysis. Research research research and never ever do a deal completely wasting my time alongwith others. Good luck to you all the best. - Member since 2020 · 65 posts · 15 votes6y
HI Gabriel, I am also a Newbie and my rentals are 4 hours away. when I first started, it was very hard, many times I asked what did I get myself into. While it will be very good to hire a PM, it is not easy to find one. I fired two PMs already, one of them after one month, he wanted to charge me 200 dollars for 3 keys. I currently have rentals in 2 different towns in PA, 2 that i am self managing and one managed by a PM which I am planning to take over soon, the one that is currently managed by the PM, I barely see any income from it, every month i have to call them to go over the owner statement. My first advice to you, will be to create a team, if you want to self managed, try to get a good handyman. While things have been hard managing two of my rentals, i have no regrets because i have learned so much from self managing and still learning, reach out to Bigger-pockets community when you have questions, believe me, they helped me a lot
- Columbus, OH · Member since 2019 · 78 posts · 66 votes6y
@Gabriel Isedeh
Welcome! Be sure to assemble a team of professionals wherever you search. It is crucial for success in long distance investing.
- Rental Property Investor · Seattle, WA · Member since 2018 · 8 posts · 1 vote6y
Gabriel, great place to learn how to get started with OOS long distance investing. Like biggest challenge in long distance investing is getting your trusted team together. It is important to invest in relationships.
- New to Real Estate · Brooklyn, NY · Member since 2020 · 4 posts · 0 votes6y
Quick tip Gabriel, look for markets that you might have family or friends in close to where you want to invest. Can also ask for referrals from family and friends maybe they may know people in that market that can oversee your team. Generating wealth is also creating jobs for people. Goodluck. Feel free to hit me.
- 6yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Gabriel Isedeh if you invest out of your area, be sure to screen any PMC you got BETTER than you would a tenant!
Too many newbies focus on the cheapest PMC and get burned and leave real estate.
Also, micro manage the PMC a BIT for the first few months so you learn about tenants and managing. This will help you understand the business so you don't get taken advantage of.
Logical Property Management4.9458 Reviews - Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes6y
@Gabriel Isedeh let me know if you have any specific questions.
@Stefanee Cayabyab The USA has the best Rent-to-Value Ratios. Plus no other country can beat our law system where title is clean free from dirty corruption for the most part.
PS completely disagree with Dave Rambsy. He is speaking to those financially irresponsible and in consumer debt.
- Realtor · Surf City, NC · Member since 2019 · 20 posts · 12 votes6y
@Gabriel Isedeh, Would love to connect and discuss what my market has to offer. Our firm has a rock solid property manager as well, I refuse to do my own management, so I farm it out to them. They were extremely picky on tenants, and now couldn't be happier with it.
Aaron Heiskell - Realtor®
Century 21 Action, Inc.
Surf City, NC - Los Angeles · Member since 2018 · 464 posts · 471 votes6y
David Greene just had a webinar on July 22nd on this topic. Did you attend? You can still buy his book.
Stay tuned. BP webinars tend to repeat, if not the actual content, but the subject matter. Brandon Turner must have talked about "Your first or next investment in the next 90 days" at least three times in as many months, and I know coz I attended two of them. So maybe in a week or two David Greene will do another webinar on long-distance investing. If he does, be there!
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