All Forum Posts by: Antonio Chelala

Hi, @Antonio Chelala! My first investment property was bought from a distance and every property I've purchased since then has been purchased from a distance. The key is to have the necessary "team members" in place that are local to where you are buying. They will be instrumental in your due diligence process. 

There is absolutely added risk when purchasing from a distance. "Long Distance Real Estate Investing" by David Greene is an excellent resource for this.

On the creative finance front, there are more deals available now than before with sellers willing to offer seller finance or subto. We actually just secured another duplex with seller finance. 

You will typically need to go direct to seller to be able to pull this off. Not always, but typically.

 Having a good solid team in place is the fundamental need of anyone who investing out of state. Whether sight-unseen or not. 

I would always recommend having some sort of avenue to see the property, or have it seen in person by someone you can trust. 

OOS investors I work with, I will typically meet their GCs or PMs at the property and walk it together while doing a live video with my investor. That way all opinions are aired at once, the GC's getting his number, the PM is figuring out the neighborhood and renters in the area, and whether it'll be a good rental. For Flips, I typically meet GCs only out there, and do the same process. 

Build a team you can trust, maybe look in markets that you also have friends and/or family that you would trust to go be eyes and ears for you every once in awhile. You can also network with agents, other investors, and generally anyone you could build enough trust in to take their word on viewing properties for you. Just a method to get eyes down there.

Alternatively, I work with a plethora of In state and OOS investors who both buy sight-unseen; they typically have additional capital in reserves, and usually have a great relationship with whoever their agent is. 

Both strategies work, but like Nathan mentioned, you have to identify the additional risk you are exposed to, as well as your experience level and understanding. 

* No matter what you do, Build A Solid Team. *

Hope this helps, always looking to connect and chat further if you are interested,

Cheers!

Yes, it adds risk. However, investors do this all the time. It really depends on your personal skills and the honesty/skills of those working for you.

If you have a knowledgeable agent, they can walk the property and shoot a video tour with you. They'll be honest about the market, the neighborhood, and the property. Then you can send a home inspector or contractor to cross-check the structure.

I wouldn't recommend it for a beginner, but it is possible. You just have to accept the additional risk.

@Antonio Chelala

Issue 1: These are not strong tenants and you will most likely need to evict them or not renew them in order to get higher rents. These tenants are very, paycheck to paycheck. At these low rents, they still are unable to pay until the 20th, and sometimes they are not paying at all. What happens when you try to raise the rent by $100? You probably are not getting paid. Nothing is wrong with cash but, if you ever hire a manager, they will need to start paying by money order.

Issue 2: Submetering is really the only way to go in order for it to be the most effective. Submetering electricity is probably what I would do first. Gas is going to be more expensive and you will need to purchase separate furnaces/hot water heaters etc. (if they run off the gas). These tenants will not be able to afford to pay their own utilities.

Additional info: If you submeter; do not renew their lease. Your taxes will increase; make sure you are aware of this. Also, get an insurance quote yourself. 

On a lighter note; it seems the agent and the seller are being honest about the tenant situation. Many sellers would not provide this much information on their tenants.

Antonio,

A couple of points/corrections:

1. if it is an owner occupied 1-4 family house you can get a homeowners policy from many companies.  If the house is not owner occupied, the most common form to cover it is a "Dwelling Fire Form"

2. Purchase a DP3 form of the Dwelling Fire policy if at all possilbe.  That is the most comprehensive.  The DP1 is the least coverage and DP2 is more coverage than DP1 but less than DP3.

3. The Umbrella policy covers if the Liability coverage of the underlying Home, Rental Dwelling, Auto, Boat, Motorcycle, Snowmobile, policy is exhausted in a claim.  It does not provide any property coverage.

An umbrella policy would suggest you already have some sort of initial or standard insurance policy; the umbrella policy usually exceeds a standard policy coverage or limit.

There usually can be some confusion in regards the nature of protection as it pertains to an LLC. The LLC only deals with protecting you from personal liability -- sort of like prevents you being held liable or arrested for the acts or crimes of a relative (the llc) who is legally distinct from you.

Actually.. you can in fact be arrested for the acts of the LLC but that is a different discussion.

The LLC typically does not protect you from any damage that may occur as a result of a physical disaster or other hazards such as: floods, fires, hurricanes, earthquakes etc.

 HI.  First I'd check to make sure its in foreclosure.  From what I see (I checked two different systems) Here's what it looks like.  3/21 the loan was sold to another back, less than 30 days later they issued foreclosure notice, then in 6/21 they refinanced.  I checked two different systems and both say the same... Not sure I'd trust Zillow on that.

That being said, when you do approach a foreclosure there's a few things to assess.  Default owed, condition of property, loan balance etc and after repair value, then based on where you offer is, the offer that is accepted, its about what makes sense to make your money. Its not as simple as "if it doesn't cash flow, should I flip", its more "what would I cash flow", or what profit could be made after the flip assuming my offer gets accepted that allows me to make profit.  Hope that makes sense.