My Experience with Distance REI

As military members know - you don't really get to choose where you live. This can have blessings and curses. You won't hear me complain about getting paid to live and work in San Diego, CA. However, this does not bode well for buy and hold investing on a budget. This does not need to keep anyone from investing in buy and hold rental properties!

As you go down the road in gaining an education in real estate investing (through BP, books, mentors, and meet-ups), you should be thinking about strategy and location. Buy and Hold is just one niche in the many available, but that is what I will focus on in this blog post. Location can be down the street or across the world - with each having unique opportunities and pitfalls attached. I am in the process of closing on a SFR in Grand Rapids, MI while I write this post from my porch in San Diego, CA.

Why I invest from a distance:

I spent hours looking for properties in the San Diego area that I could potentially house-hack or rent. However, the only properties that were making financial sense were in the most seedy areas of town. Since I won't be here forever, I don't want tie up a ton of my own capital in a property that will not be making me money - so I chose to rent here and buy houses somewhere else! 

When looking for a market to invest in, try to find some informational "competitive advantage" that will allow you to invest in decent neighborhoods - avoiding the lure of "cheap properties" that will only cost you more time, money, and stress in the long run. My wife is from Grand Rapids, MI with her entire family still living there (along with half of my family to boot) giving me essentially the same amount of insight in the neighborhoods as if I had grown up there myself. THIS POINT IS KEY - even though I am investing from a distance, I still know the market I am investing in. 

Property Management is a must-have in my opinion for distance real estate investing. I could pay my family to help me self-manage from a distance, but we are not professional property managers - I would spend more than the 7% a month on mistakes in placing tenants, headache for that 2AM plumbing leak, and lost revenue for not optimizing the rents. Good managers also have relationships with contractors that will do good work at a fair price. 

This brings me to my last point - investing from a distance highlights the importance of having a good team in place. Currently, my team consists of my Father in Law (Boots on the ground), my real estate agent (that can feed me on and off market deals), my property manager (placing and managing tenants), and my lender! 

This is still a learning process for me, but the BP forums and blogs provide tons of answers to the questions that have come up throughout the process. I am stoked to close next week on this SFR and continue the journey down real estate investing!