Long Distance Investing: How to Build a Team
I am a little envious when I hear real estate investors say they will walk over to look at a property for sale in their neighborhood or drive five minutes to check on new potential investment. I am more of an ultimate long distance investor, not having lived in the United States since 2004 with stints in the Middle East, Africa, Caribbean and South Pacific. This makes finding and assessing properties to purchase more of a challenge. I miss out on seeing properties that are off market to make an offer or the ability to walk through the neighborhood to identify if a property is adjacent to high retention power wires or located next door to the club house of a motorcycle gang. Online pictures don't always capture such things.
Successful Long Distance Investing Requires a Talented Team
There are at least three people that you will need to find to be part of your team if you intend to invest out of state or from overseas.
1) Real Estate Agent: A reliable real estate agent who emphasizes all of the cons with a property before the pros. This person should identify any deferred maintenance with the property and be able to suggest an estimate for repairs. This person also needs to be able to shoot good quality videos with sound from inside and outside of the house to help you capture issues like road noise or the neighbor's pack of barking dogs. This person needs to truly know your specific niche as an investor saving both your time and theirs. In my experience if this realtor is not trying to talk you out of buying certain properties they may not be the right person for the job.
2) Property Manager: I have had to fire a few property managers who were more focused on their fees than my property. A motivated and engaged property manager looking out for your interests is worth their weight in gold. I have also found that the closer the property manager's office is to your properties, the better. I had one property manager located far across town who never showed my property to tenants. I missed out on thousands of dollars in rent as the property sat vacant. The right property manager also has the names of skilled and responsive contractors who offer quality work for a fair price. This property manger will save you time, money, and headaches.
It is worth pointing out that personalities are different so a property manager that works well for one investor may not be the right fit for another. The key is finding a property manager that fits your personality and investment goals. I find the best way is to schedule interviews with multiple property managers to find a good match well before you buy in the area. If you discover you made the wrong choice selecting this property manager, don't waste time, end the relationship as soon as practicable. A bad property manager rarely improves over time.
3) Lender: Working with lenders from a distance poses many unique challenges. I have found local credit unions to be far better than larger traditional banks. If your lender is not responsive to emails, find a different lender, because it will be nearly impossible to try close on the property quickly which means you may lose the deal. Local lenders also tend to know the market well and are looking for repeat business from investors in the area, you want to be building a long term relationship with your lender.
Property Closings from a Distance
If you live overseas it can be difficult to arrange a cashier's check or to conduct large wire transfers. Banks are watching out for fraud and sometimes limit these services to customers who are out of the country. I find it best to get the cashier's check to the title agent as soon as you put a contract on a property. If the deal falls through the title agent can hold the check for the next purchase. Alternatively, you can have a reliable member of your local team hold your cashier's check to provide to the title agent nearer to closing.
Electronic signatures have made putting in an offer or counter offer far easier, but closings still required signed and notarized originals. The U.S. Embassy in your country offers notary services on certain days. Keep in mind that closing documents can take four to five days to arrive by FedEx or DHL from overseas and you don't have the ability to make last minute corrections to the documents at the closing because you are not physically present. A limited power of attorney held by a trusted member of your team may help to overcome some of these last minute issues.
Build your local team so you have the freedom to invest either out of state or from overseas. Having the right team will help any long distance investor whether it is from Congo to Chicago or Wellington to Washington D.C.