3 Practical tips for investing in real estate remotely

Investing in real estate remotely can be intimidating, to say the least. From selecting which market to invest in, to building a team of reliable and communicative vendors, each step of the process is critical to building a healthy portfolio of homes. In this video, Michael gives you three tips that can help you get it right from the start!  

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Transcript

What's going on. Everyone. Welcome to the remote investor. I'm Michael albaum, and I host the show with to my co hosts, Pierre Carrillo and Tom Schneider, and we talk about everything related to remote real estate investing. If you are new to remote real estate investing, you might be thinking to yourself, how in the world is that possible? I can't go see the property. I can't drive by the property to check up on things. So why would I possibly want to invest remotely? As a bay area resident and California native, I can tell you why, because investing where you live isn't always an option. So instead of throwing up your hands and saying, Well, I guess real estate investing isn't for me, come along with us, and we'll show you how it could absolutely be for you. So one of the biggest key takeaways I've learned over the years of investing remotely is how important and fundamental using a great property manager is. Now if you're someone that self manages, kudos to you. I have a lot of respect for the people that do that, but for the vast majority of us that are working still a nine to five job and don't have the luxury or ability to self manage, a property manager is going to be the linchpin and one of the most critical components you're going to have in your real estate investing arsenal. So number one, loop your property manager into the acquisition and buying process. Now this is something that a lot of people, when they hear property manager, probably aren't thinking acquisitions. When they hear property manager, they're probably thinking, hey, I already own the property now the property manager takes over and they're going to manage it for me. While that is true, something that I love to do and recommend to everybody I talk to about remote investing is leverage them in the buying process. I always say, date your agent and marry your property manager. So the property manager is somebody that you're going to have a long ongoing relationship with. A property manager is also somebody that lives, breathes and operates inside that market, day in and day out. It is their literal lifeblood to be an expert in that local market. Now, real estate agents can be local market experts as well, but they might not be as up to date on what market rent comps are or what market comparables are when it comes to rent. So if you involve your property manager in the process, they can give you a really good idea of what the property is going to rent for. They can also give you a really good idea of what it's like to own and operate rental real estate in that particular market, versus an agent. They're very familiar with what buying and selling real estate is in that local market. So having an agent is a great thing. Having a great property manager layered on top of that is even more important, in my opinion, additionally, getting your property manager to take a look at any inspection report you get is one of the most important pieces of the buying process. Again, in my humble opinion, property manager is going to give you great insights into what things need to be addressed now versus what can wait down the road, and can really give you a lot of ammunition when it comes to having the discussion and negotiation around the acquisition. So that's number one, involve the property manager in the acquisition or purchase process. Number two, interview multiple property managers well in advance of actually closing on a property in a particular market. Now I'll be honest with you, this wasn't something I was always good at practicing. I knew it in the back of my mind that it was something I was supposed to do, but when it came time to the acquisition, I got so excited and so short sighted that I said, I'll worry about the property manager after the fact, and boy, did I pay for it. I've chatted with some people in the past that have said, Michael, I interviewed one property manager and they were perfect. Why would I bother interviewing others? It just takes up more time and attention that I could be spending going to look for deals. Well, something that I always encourage people to do is when you interview multiple property managers, you're gonna get a really good feel for if the one you've selected is a great one, or maybe there are better choices out there. We just haven't come across them yet. So I find it a great use of time, energy and resources to go interview multiple property managers, because it's going to give you an idea of what the market has to offer. It might also tell you that it's not a market you're interested in investing in anymore because you can't find a good manager. Now, if somebody can't find a good manager, it might just be because they haven't looked in the right places, or haven't looked under every single stone, but if you truly have exhausted every management resource available to you in that market and can't find one that you're comfortable with, it might be worth reconsidering whether that market makes sense to invest in, because, again, as a remote real estate investor, the property manager is one of your biggest assets, but also your biggest potential fail points. And if we're not confident in our property management with our remote investment, again, it might be time to reconsider that market to invest in and last but certainly not least, take it from me as someone that has had to fire their share of property managers. Don't be afraid to fire quickly. Look, people are human. They may. Make mistakes. I make plenty of them, and I'll be the first to admit it when I do, or I like to think of myself in that light. Anyhow, property managers are no different. They make mistakes. There are issues that hopefully get overcome, and so that's not to say don't give anyone the benefit of the doubt, or don't allow anyone to be human, but all that being said, if a property manager is ineffective and you're not able to get out of them what you're needing. It might be time to change property managers. Now I'm someone that thought the pain of changing management companies was going to be worse than their transgressions, and turns out I was wrong. The short term pain is well worth the gain to bring in effective and new property managers. And one of the reasons I think this is so important is because the longer you stay with an ineffective property manager, the worse things tend to get, and the more embedded in your business they become. So cut your losses quickly and move to step two, which I mentioned previously, as you should have interviewed and screened multiple property managers. So hopefully one of those can be your backup, so you're not having to start from scratch. So this is all starting to come together with involving them in the acquisition process, interviewing multiple and not being afraid to pull the rip cord or rip the band aid off sooner rather than later. So hopefully this was helpful to everybody who's an active remote real estate investor or aspiring remote investor. I encourage everyone to come check out the show wherever you get your podcasts. We would love to hear topics and things you'd like to hear more about and learn about on the show, and we look forward to seeing you in the next one Happy investing.