One consistent that hasn’t changed when it comes to real estate investing is that it is still all about location, location, location. That means the best investment opportunities for you might be out of state or even out of the country. Maybe you’re a retired investor living in Las Vegas or an active investor living in the Caribbean, either way, if you want to invest in Memphis, Tennessee, you’re going to need a strong team of specialists to make the most of your investment.
The good thing is that you have options. Your basic two options are buying turnkey rentals in a distant city or putting together your own team to put your deals together. Here is an outline of what it takes to put your own team together.
While you already realize that you need a solid team to assist with your investment goals, you may be unsure who you need on your team and what services to expect from them. For the most part, the following services are needed to form a world-class investment team that you will lead to profitable ventures.
Your World Class Investment Team
Wholesalers: These are the birddogs in the local market. These are people skilled at finding highly discounted investment opportunities for you to consider. They seek out the best local investment opportunities for you to invest in and for that they make a small commission but only when you complete a purchase. However, they almost always have several potential buyers. When they serve up a property matching your investment criteria, you need to jump on the deal quickly.
When you start working with birddogs, be sure they have a clear understanding of what you are interested in investing in. Because you are investing in a distant city, it’s a good idea to ask others on your team what makes the most investment sense at that location. However, in the end, the decision is always yours.
Financial people: These people don’t have to be local. But if you’re an active investor, you need access to money. Even if you make all cash offers (which are bringing in the best deals today), you don’t always have cash on hand when the best deals come along. You need to have hard money lenders, bridge lenders, and private lenders on your team and ready to make fast loans that you can depend on. Don’t depend on banks because they move too slow.
Closing attorney or an escrow company: This requirement varies by state but you need someone that will pull together the closing paperwork quickly and make sure the deal closes in a timely manner. This person also typically arranges for title insurance to insure you receive a clean title to the property.
Insurance agents: Regardless if your investment property is occupied or vacant, you need insurance on it. Your insurance agent makes sure you are always protected in case disaster strikes your property or if you become liable for some unfortunate event.
Contractors: You know who these guys are. If you are rehabbing and flipping properties, these guys are indispensible. A general contractor will oversee the renovations needed to maximize your profits and to get the property sold fast. You absolutely need to be able to fully trust your contractor.
Property managers: These people show your vacant property and identify, screen, qualify, and place paying tenants in your property. This is how you get the all-important cash flow coming in to your bank account. After they place a tenant, they collect the rent, arrange for maintenance, and are the people that are called at two o’clock in the morning to deal with an overflowing toilet.
When You Are Considering Distant Investing
There are several things you need to consider when investing thousands of miles from where you live. Among these are:
- A safe, secure, low crime area close to shopping, schools, and other amenities that quality tenants desire.
- An area with a large enough pool of desirable tenants. Often these are blue-collar neighborhoods. Memphis has one of the highest percentages of renters in the country.
- A home of approximately 1,000 square feet with 3 bedrooms and preferably 2 baths.
Beginning with this basic criteria will quickly get you into a distant and highly profitable investment program. Still, don’t overlook more obscure issues such as if the property is on a flood plain or susceptible to hurricanes. Any issue can be over come but when it’s not in your backyard, you are wise having a team of professionals on your side.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.