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Strategy Saturday
SS34: How To Get Started In Remote Real Estate Investing
August 7, 2021
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SS34: How To Get Started In Remote Real Estate Investing

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing how to get started in remote real estate investing.

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Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing how to get started in remote real estate investing. So the definition of remote real estate investing is when a property owner owns and manages an investment property that is located outside of their primary city state, or even their country of residence. I’m going to be discussing just active. And semi-passive investing in this episode since passive real estate, investing REITs indication, funds, et cetera, is easily done from anywhere in the world. And there’s not really anything you need to set up to passively invest. If you’re purchasing an investment property directly, though, you will need to do on the ground due diligence before closing this takes time, money, and working with local contractors, such as real estate agents, appraisers and attorneys during and after the purchase process is complete. So first off we can talk about semi-passive remote investing.

Charles:
So when I’m explaining between active real estate investing and semi-passive real estate or investing semi-passive is usually when you have a property manager and you’re dealing with high level issues to high level problems with the property. You’re not dealing with collecting rent or with somebody you know, someone had a leaky faucet, you know, that’s the only thing in that stuff. That’s all handled by our property manager and that makes the investment more. Semi-Passive not fully passive because you’re still part of it, but semi-passive when I’m talking active investing, active investing is maybe when you’re doing asset management on hundreds of different apartments and you have consistent contact with a property manager because there’s always something going on. And whether it’s usually weekly in a probably start off daily when you’re buying a property. Cause there’s so many things that are need to be taken care of.

Charles:
And active also is if you’re managing a property a hundred percent yourself. So if you’re managing the property and everything goes through you and there’s really not too many other people with you, that’s more of a V that’s a very active role, which an okay way to start mud, very difficult, if not impossible for doing it when you’re remote investing, because you can’t be going there and fixing stuff yourself. Now, when you’re active, managing, if you have a team in place, you can make more of a semi-passive route, even though you don’t have a property management company. And that just takes processes and systems, which we’ll talk about a little later in this episode. But for these reasons of having a semi-passive investment, a turnkey investment properties are ideal. If purchasing remotely now I’ve never purchased a turnkey property from a turnkey provider.

Charles:
I’ve purchased properties that were pretty renovated and rent them out from there and still own them today. But I’ve never purchased a property from a provider that was kind of a, it’s a true turnkey. And I’ll explain a little later on as we go through the pros and cons, but turnkey investing was born out of the flames. The great recession when the housing bubble burst in 2008, at that time, it was actually cheaper to buy homes than rent in certain areas. The United States sometimes by as much as 30%. So such properties are typically sold by specialized firms, turnkey firms who purchased and renovate undervalued properties before flipping them to investors like yourself. So when I’m saying flipping is, you’re really, they’re really flipping it to you if, but they work on a different kind of criteria and strategy. When you’re a regular flipper, you’re buying a property for a hundred thousand dollars that you can sell for 150, that takes $25,000 worth of work.

Charles:
And you notice the spread after all your expenses are paid. When you are doing Turkey investing, they’re looking at a property and they say, this can rent for X amount, and this is what we’d have to buy it for. This, the work has to be done. This is our profit margin. And so it’s a little different of a strategy, but really they are just flipping the property to a, a an investor and an investor at the end of the day. And then the, an investor is paying that premium because they didn’t source the properties themselves. And they now are able to have a turnkey solution where they’re able to plug in and tap into the property managers team in network of contractors, of handyman, of everything else that goes with it to make their process of owning that property much easier.

Charles:
Now on occasion, some of these properties can already be occupied by tenant with a set or guaranteed a rent by the turnkey seller. Remember that when there’s a turnkey, when there’s a guarantee on a turnkey property, I mean, you’re paying for this one way or another. I’ve seen turnkey sellers say that we guarantee rent for 12 months or 18 months or 24 months. Just know that they’re working this into the price or selling it to you. So you’re for issue that might not happen on the end. You’re paying for it upfront. And that’s a, that’s something to take into consideration when you’re doing this. Now, of course, the downside of a turnkey property purchase is the fact that you’d be paying a premium plus monthly property management fees for the luxury of having the semi-passive investment. Some turnkey red flags to look out for would include a cash only deals as these do not require any inspections or appraisals done before, because there’s no financing purchase contract with no contingencies for factors outside of your control.

Charles:
A turnkey provider did not perform any noticeable renovations on the property. So you’re buying a property for $150,000. You see that the turnkey provider bought it for 125,000 and the pitchers and everything looks pretty similar between, and you ask them and they don’t have much to say for renovations that they did. I mean, they’re making a very healthy profit upfront on the property. And that’s one of the reasons too, when you’re buying it, the turnkey property is pulling out equity. They’re pulling out value that they’ve created in the property. So when I buy properties and you know, our firm buys property, we’re buying value, add properties. And this means that we’re able to add some value to the property and notice an increase in net operating income and a Y. And that goes to the bottom line, also goes to the value of the property.

Charles:
Now, when you’re, when buying a turnkey property, the issue here is that that equity, that value has already been created. And you’re an ness. It’s much easier for you because you’re not sourcing the property. Sourcing properties is very difficult, especially in the sellers market. Okay. And they have all the other pieces. They’re going to have a financing person for you to go to. They’re going to have they have someone when someone calls in, they’re going to collect rent they have everything covered. That’s what makes us semi passive investment, because really once that investment starts going, you probably aren’t going to be talking to them every week. You might be talking to them once or twice a month. And I mean, I have some property managers on small properties that I own. I talk to them once a month. Sometimes I talked to them the actual owner of the property management company four times a year because I’m work with someone in the office.

Charles:
And if I don’t see any noticeable issues, I don’t have to call in. Right. And I’m getting reports. I know how the property is and everything works out. So that’s a semi-passive investment. Now, when you’re doing active remote investing, this is when you’re doing everything yourself, right. You’re sourcing that undervalued property. And you’re putting your team together. Yes, this is gonna, this is more time consuming, but it’s also more profitable. And if your turnkey is a great way to start, don’t get me wrong. It’s not gonna be the most profitable investment you’ve ever made, but it could be a very solid investment for you starting off. But when you’re going and you’re doing a want to grow active remote investing is probably were. You want to go next and make sure to listen to episode S S 12, where I talk about self managing properties, it gives you kind of a whole list of what to do when you’re buying a new property.

Charles:
So first off is knowing the market, and if you already own a property and you’re just starting to remotely manage it, you probably are well aware of the market already. And this happened to me. I own properties. When I moved to Florida in 2012, I had a third-party manager take over and and it became a semi-passive investment for me. And I knew that market inside and out. But now I wasn’t worrying with all the day to day on it. If you’re active investing like this, you could put together your own property manager, or you could be handling the property management yourself remotely, and then just calling people and contacting them when an issue arises, which we’ll get to in a second. But if you want to start purchasing remotely out to just learning about different markets and then choosing one, so find different markets that might be a very advantageous to your investment, philosophy and strategy.

Charles:
And you know, maybe this is an area you grew up in, went to schooling or want to retire in or a new area altogether. Next is having a trusted team. Once you have major choice, speak to brokers, which ones are good, find investment investor-friendly agent and get a list of recently closed properties in similar to the criteria that you’re looking for. And maybe have lists of the ones that, that investor friendly agent have even sold themselves, get referrals from the broker for handymen contractors, lenders, property managers. If you want to step back from the property and go visit the area, spend time driving the city, different neighborhoods, drive some of the most recently sold properties and make notes of them. So you’ll know when you say this property here, this is exactly what I’m looking for. You put on the, you know, you make notes of it.

Charles:
So when you talk to that broker, you say, listen, this property here, I want this one. I want nothing to do with this one is too expensive for what I’m doing. And like every city, there’s a place where you it’s too expensive. There’s a place where it’s too, you know, it’s, it’s like a declasse neighborhood. It’s not what you want. You want to go right in the middle there and a C or B class property where you can get some cash flow in some appreciation meet with the broker face to face. So set up some appointments with the broker and with some of the contexts that they gave you and spend some days driving the area and know exactly what you want. So when you’ve seen it, you can explain to them what areas you were thinking about work and what property size, et cetera.

Charles:
And this way you have a narrowed down, not just to, you know, east or west part of the city, but you have neighborhoods. And you know, this neighborhood, this neighborhood, this neighborhood is what I’m looking for. And you’re going to look a lot more professional to that broker. You’ve done so much homework. They get calls all day from would be investors. And you’re actually going there traveling to see them spending several days or a week there I’m meeting with all these people, having these face-to-face meetings with the referrals as well. And they’re going to start seeing you as a real investor. That’s going to close on something and they’ll start sending you deals and start allowing allocating more of their time to you as an investor. Now, when a property comes through, you know, what neighborhood you like, and there not be a requirement for you to go back to the area.

Charles:
You just make the offer. It’s one thing, if you’re very confident near you go, I knew exactly where this is a, this is exactly what I want. I pull it up on the maps. I, this is what I want. I’m making the offer right now, compare to someone that you might be competing against for the property. And they don’t know they have to drive out there. They have to talk to the broker for a half hour. They have to do this. They have to all this kind of stuff. You don’t have to do that. You know exactly what it is, and you can pull the trigger right away and get that property under contract. Next is automate as much as possible and have a process in place. And this is really important. If you’re going to be doing a hands-on like active remote investing, right?

Charles:
You’re not going to have a property manager. If you know, in a being more hands-on and direct is your thing. Given the abundance of tech tools at our disposal to taste such as property management, cloud software, digital document, signing, and virtual walkthroughs of units or required renovations, it’s easier than ever to manage every aspect of your direct property investment. Remotely. Now have the online software handle. The rent collection have the online software allow the tenants to submit requests online for repairs or other general re re you know, repairs or inquiries. And you know, that way, if you’re doing it, and you’re a hundred percent active, you can have someone that contacted you through the system, it’ll send alerts to possibly your handyman that you have that are going to go out and take care of something. So that’s a great way of doing it.

Charles:
And it’s an easier way of keeping track of everything between you and your team. Next is start documenting the process and consistently updated. And this is something that I do, and I know it’s really difficult to do, but you’ve got to start documenting the process and then consistently updated as you figure out what’s good. And what’s not for instance, what am I looking at our property? Here’s the whole, here’s the property purchase a guideline right here is the flow of how this works. Someone just moved out. What do I do? Okay, I’m going to go to this checklist and I’m going to follow this. And obviously when he put it down, initially, what you think’s going to happen. You’re going to edit that, and you’re gonna find out you, you know what, like this has to, this person should come in first and then this person should come in and I can now coordinate.

Charles:
It makes it much easier when you’re starting to grow your business and scale your business. And now when someone comes to work, you’re not frantically trying to make up all these checklists and flowcharts and processes and screen-share videos right away. You’ve already done some of this and maybe it needs a little cleanup, but majority of the work’s done. And you now have a proven system for running a real estate investment business. So going to remote property, investing route opens up a wider pool of potential investment opportunities, access to more affordable real estate than your local real estate market may offer lower taxes and other advantages. I hope you enjoy this episode. Please remember to rate, review, subscribe, submit comments, and potential show topics at global investors, podcast.com. Look forward to two more episodes next week. See you, then.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure subscription documentation and are subject to all applicable laws. Please consult an appropriate tax, legal real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of syndication superstars, LLC, exclusively.

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