In
another thread gimp asked:
arebelspy - You own property all over the map. Do you visit before you buy? Do you visit a bunch of places before buying one? Do you leave the visiting to people you trust in areas you know? How does that all factor into your costs per property?
I've gotten this question a lot before, so I decided to start a new thread to answer it, rather than having it buried on page four of that thread.
Do I visit a market before buying there? Not typically, no.
As I explain it to people who seem flabbergasted that I own multiple rentals that I've never seen (and in fact have bought and sold property - i.e. done flips - that I've never seen) - I rely on experts.
I'm not a contractor. When I want to buy a property, I rely on a home inspector to tell me what's wrong with it, and I rely on a contractor (or three) to give me a bid for the rehab.
Whether I fly out to the property and stand next to the inspector and then he emails me the home inspection report, or I sit at home and then he emails it to me makes literally no difference to the end result. It's not like I'm going to go out there and say "that furnace is bad," because I have no idea what a bad furnace looks like.
I'm relying on that professional.
What difference then does it make if I fly out to the property? None.
So much you can do on the Internet now, and they can send me photos, video walkthroughs, etc. Why do I need to be there? And either way I'm going to have to wait for the rehab bids to find out what my various costs will be.
When I'm going to buy a property in another market, I network with local investors, property managers, Realtors, and other experts. I don't know the neighborhoods. I do some due diligience online regarding the area in general, but I need the actual boots on the ground to tell me the knowledge they've gleaned from years of experience in that market. I rely on experts.
Me flying out there for a few days and driving the neighborhoods tells me... what, exactly? A lot less than 10 minutes on the phone with an expert who owns 50+ properties in the area and says "stay away from this neighborhood, but right across the street is this one and that's good, and avoid zip codes X, Y, and Z," etc. etc.
Same thing with the management - I'm going to be relying on a property manager, so I make sure I find a good one and talk with them and rely on their expertise to find out about the market.
I have to be able to vet the people that I'm working with. When you talk to someone for more than five minutes, you can figure out if they know what they're talking about, or if they're just bullshitting you. I trust much more in my ability to tell if someone is an expert than I do to go visit a place for a few days and know much about it.
To vet someone, you talk with multiple people, and you'll find out who has a consistent story that fits and who is making stuff up to sound good. You get referrals, and find out who comes highly recommended. You ask for references.
In other words, I think visiting a place is WAY overrated. I wouldn't be able to tell anything about a property by looking at it for a half hour. I need an expert to tell me what part of the market to be in, another one to tell me what needs to be fixed on a particular property, and a different one to tell me the cost of that.
My job consists of:
1) Identifying potential markets.
2) Networking with experts in the area. Vetting them - checking references, reading reviews of their company (if applicable), etc.
3) Running the numbers based on the information I get from them.
If the numbers make sense, great, I pull the trigger. All my team is in place. I have a Realtor already to make the offer, a contractor to rehab the property, and a property manager to get in tenants and run the place.
(Rehab/flips are a similar process, the last step just reuses the Realtor to sell, rather than the property manager.)
Don't let that (simple) series of steps make it sound easy. It's a lot of work finding potential markets, narrowing down where you will invest, talking to multiple Realtors, investors in the area, home inspectors, contractors, property managers, etc. etc. Dozens of people you'll build relationships with. And while an eventual "face to face" can be beneficial, it's not always necessary. If and when I do fly out to markets I own properties in, it's to buy lunch for my team and hang out with them. Seeing the properties? Meh.
None of those steps requires me to be there. All of it requires me to find professionals who are competent and helpful. I can do that from anywhere.