Posted by Jim FL on December 14, 2005 at 14:36:50:
Tye,
I always enjoy your posts, thanks for sharing.
The line in this one that cracked me up was this…
“Another thing I just realized is that I name all my properties. Not sure what that means, but I think my approach is probably not typical of male investors. Yes, there is an innate difference!”
You are absolutely right. I’ve never ‘named’ any properties, but surely have called a few properties names.
Anyway, have a great day, and Merry Christmas,
Jim FL
I am looking to buy my first property and would like to know how any of you invest in properties away from home. The property needs to be rehabbed and that cost is very minimal so say the seller. around 10k. I will visit any property before i buy it, but what else should be asked or looked at, etc. TIA
Re: investing outside of your area - Posted by Atlanta_bob
Posted by Atlanta_bob on December 16, 2005 at 22:25:45:
Hello jen:
If you have never purchased an investment property yet, then I would strongly encourage you to buy a house that is fairly close to where you live. You need to know the “surprises” that can occur and there are way too many to list here. With that said…
I live and invest in the northwest suburbs of Atlanta. However, a family member decided to attend college in Savannah, GA, which is 4 hours and 15 minutes away (by car), from door-to-door. After buying that first house, I recognized the need to replace many standard items from these (circa) 1953 houses, like: innerds of toilet’s water closet, new refrigerator, new stove (old one was avacato green!), electrical light switches & wall outlets, etc. . . By replacing those commonly used items, I knew they would not break, so I would not have to travel 4.3 hours (one way!) to fix them, nor call upon a local company to fix them.
After that first house, I bought 2 more (circa 1953) the following year and did the same repairs and/or preventative maintenance to them.
During the past 4 years, very few items have broken and when they do break, I might drive to Savannah to fix them or call a local company (keep a current telephone directory!) to fix those items. I manage all three houses from my residence located in Atlanta’s suburbs.
I am living proof that a successful RE operating can be run from afar. I am 200 miles away. When I started, I lived in California, and was 2000 miles away.
The KEY: an excellent manager. very hard to find. lots of bad ones out there. I recruited a construction-type, and trained him how to manage tenants, do leasing and evictions…He is my eyes and ears. His crew does my rehabs. He understands what I want when I acquire new properties, and has a good habit of finding them. He benefits directly, because his crew gets to to the rehab work, and he gets to manage the place.
I have to say, before I secured this guy, I suffered a lot more headaches and frustration.
Posted by David Krulac on December 13, 2005 at 06:25:43:
As stated by another, you should be making your money when buying. therefore if you already made your profit when you buy, you don’t need to rehab to make a profit.
if #1 is correct then you can sell WITHOUT doing the rehab and make a bunch of money. this is obviously easier and quicker than rehabbing and possibly making the same amount of money. I boought a house for $12,000 rehabbed it and sold for $67,000. another house I bought for $3,500 rehabbed and sold for $53,000. And another house I bought for $3,000 rehabbed and sold for $50,000. not even counting the time involved, and one took over a year, I think that I could have sold each of them WITHOUT doing the rehab and made as much money. In fact one of them after I sold was eminent domained by the government and torn down. All my pretty rehab was for naught.
rehabs ALWAYS cost more and take longer than expected. long distance just adds to the dollar cost and the time costs, as transportation costs money, think $3 gas prices, and the travel time involved.
some people have sucessfully done long distant rehabs, but that doesn’t mean that it is easy, recommended, or the best way to go.
at one time I owned property in 7 states, no more. now I’ve sold property that’s 30 minutes away because it was too far away. meeting contractors, prospective buyers or tenants always took more than an hour. in a simplification move I sold those puppies.
I like to be able to see the property whenever I want on a moments notice. and no matter where you live, big city, or small town, there are investment properties and rehab properties somewhere near by
Re: investing outside of your area - Posted by Sailor
Posted by Sailor on December 12, 2005 at 19:16:26:
I have bought out-of-state properties a few times, but I had a lot of experience buying & selling before I did it + I had excellent agents. My primary career was in research, so I was able to call on those skills, too. (Tip: the local newspaper & yellow pages w/give you info the local agents won’t/can’t.) I make the deals contingent on my inspection & that of a home inspector. Double or triple seller’s rehab estimates. Better yet, have the seller get real estimates for you–that might allow reality to set in. Even so, your home inspector w/find more problems, then you can re-negotiate what had been the previously agreed-upon price. You have to be VERY careful in these deals, & have a LIST of good exit strategies. Good luck!
Re: investing outside of your area - Posted by dealmaker
Posted by dealmaker on December 12, 2005 at 18:49:33:
I’d proceed VERY carefully! It’s hard to know more than one or two markets, doubly hard when one of them is more than 15 MINUTES drive away! Long ago I learned, if I can’t drive by and see my tenants, or do some quick repair in less than 30 MINUTES round trip, IT’S TOO FAR AWAY.
Problems (and the excuses to NOT go handle them) increase at the SQUARE OF THE DISTANCE YOU HAVE TO TRAVEL to go fix them! Townsends law!
Re: investing outside of your area - Posted by Jenise
Posted by Jenise on December 17, 2005 at 09:22:25:
Thank you. Living here in LI, NY doesn’t leave much room for buying a home, yet alone fixing it. Out here, yes, there are deals, but, for how much? A lot of money. So, I will be willing to travel outside of the city just so I can get a few deals to start out with. It would be great to be in my own backyard, but…
Re: investing outside of your area - Posted by John Corey
Posted by John Corey on December 12, 2005 at 20:44:55:
To add to Sailor’s comments just assume that some things costs more when you are at a distance. Either you have to get someone to do something minor or you end up having things replaced that might have been able to be fixed.
A number of people do very well investing at a distance. More do well by sticking to locations they can drive to in X minutes. The two ‘styles’ are related but not completely the same.
One major problem areas is when you have rehab work. Managing a contractor that you can check on is hard enough. When you are at a distance and can not tell when they are working on the job is worse. Some contractors are great and will need very little supervision. Finding one at a distance is a crap shoot.
I invest across 11 timezones. I use property managers and figure the extra running cost is not really extra. I would not have the time locally (I did manage 7 of my own in the past). You should always pay yourself or pay a property manager for management so it is a cost that is always present. Many who only invest locally tend to forget to pay themselves so underrepresent the cost of ownership.
John Corey
PS. I did start investing locally and it just grew into remote when I moved around. A friend never invested locally as it was too expensive. He focused on cash flow and was always focuses on areas 500 miles away or further. We both have done fine over the years. He put in some miles on planes and focused more on building a team in the markets he cared about. I did my own management and minor repairs until the fun of that wore off.
Re: investing outside of your area - Posted by Sailor
Posted by Sailor on December 12, 2005 at 22:42:14:
As usual, John is right (Hi, kid!). I should have pointed out that the deals I did across time zones (including two I did while out of the U.S. that involved me going several miles via dinghy & hitchhiking every time I needed to communicate w/my agent) did NOT include one iota of rehab. One was raw land, one was rented back by the seller, & one was in a retirement community w/really good mgt in place.
I should also point out that my MHP is 20 miles away & I think that is too far because it is extremely labor intensive (+ I don’t drive @ night). Word of advice, if you are rehabbing for rental instead of a flip, it w/be well worth your time & trouble to fully vet your tenant.
Our advice & cautions could probably be more helpful if we had more details on the property & the deal,
Re: investing outside of your area - Posted by John Corey
Posted by John Corey on December 13, 2005 at 04:38:50:
Sailor,
I did not mean to be right or for someone to be wrong. More I was extending what you were saying.
There are lots of issues with any investment in RE. It can be labour intensive even when you are not hands on. Investing at a distance has different issues than when one is investing locally.
I find that I tends towards properties that require less maintenance for me to organize. A condo/townhome/SFR with an HOA. The more that services are priced in the more I can predict the numbers and the less there is that I have to organize at a distance.
I rented an apartment in NY once. Actually I was the tenant in a lady’s condo. She was on the other coast. The building had doormen and it had a handyman/contractor on site who I could hire or the landlord could hire. He knew the building, was reasonable in his pricing and was always there to call on. I can imagine that such a set up was ideal for the landlord on the other side of the country.
Back on the more general topic…
The book that has the title which starts out “Weekend Millionaire” explains that savvy investors make their profit when they buy. It further goes on to explain that everyone has limited time so if you make your profit when you set up the deal why waste time handling the property management. Focus on doing good deals and hire out the management. The author suggests external property management even though he is saying you need to invest within 10 miles of your home. Hence he does not even think someone local should be hands on for the tasks that only drive costs but do little to nothing to drive profits.
Re: investing outside of your area - Posted by Sailor
Posted by Sailor on December 13, 2005 at 17:41:52:
I didn’t take it that way, John. I just thought I should qualify what I had said before w/more info.
You are absolutely right that maintenance can be a killer. Nevertheless, I do like to be somewhat hands-on. It’s probably just the anthropologist in me, but I can learn more of what I need to know as a participant-observer. I don’t need to hammer in every nail, but I usually wanna be in the thick of things. Thinking about it as I write, I realize that it is also the nurturer in me that needs to particpate. When I view a property, it isn’t what it is (as long as it has the requisite good bones) , but what it CAN be that fuels my fire. That said, & w/the exception of the MHs in my MHP, I don’t do major rehabs unless I live in them. As w/children, I do like to help a property reach it’s potential. I’ve got a raw land FSBO right now (it’s in the 1st album at http://www.picturetrail.com/sailorpics), & I can’t leave it alone. It started as 8 orphan lots & I kept adopting & had the whole kit & kaboodle surveryed as a single parcel. I just had a dozen red oak trees delivered, & I’ve got a timber contract to thin out the unhealthy trees in the woods. I’ll plant the trees & clean up after the timber crew myself, & if it doesn’t sell right away I’ll plant flowering bushes in the woods in the spring. Another thing I just realized is that I name all my properties. Not sure what that means, but I think my approach is probably not typical of male investors. Yes, there is an innate difference!