THE STEP BY STEP GUIDE TO REMOTE REAL ESTATE INVESTING

Uncategorized Nov 23, 2021

If you have been struggling to find deals in your hometown market… you’re not alone. But it doesn’t just stop there. When you find deals, the sellers are asking way too much and it seems like the world is working against you! You spend countless hours searching, but you end up just running out of deals to look at. The numbers never work, and it’s an uphill battle. 

 

And it makes you wonder...is it me?  Am I doing something wrong? It’s not YOU, it’s your market! 

 

Real estate markets are like tides in the ocean. Sometimes the tide is low, and there’s infinite opportunities for you to invest in (Buyers Market). But especially now, the tides are high! There’s other sharks swimming in the waters, and the competition is fierce. Everyone is trying to fight over the same fish to eat (Sellers Market), leaving you forced to sit, and wait… sometimes YEARS without doing any deals. 

 

The fact is, it seems like the only way of real estate investing that’s taught these days is the “wait in your home market even if it’s a competitive sellers market” type of strategy. Well, that doesn’t have to be the case. We have been doing real estate investing outside our home market for almost two decades. 

 

We live in San Diego, California. Besides the great location, and living in sunny California… there are ZERO cash flow deals here. We didn’t want to leave California, so we were stuck in between a rock and a hard place. We shouldn’t have to leave our home to build our real estate portfolio...so we adapted and started investing in other markets - REMOTELY!

 

Remotely?!?!  Say what???  LOL

 

I know you probably have some questions about it, so this article is going to clear the air for you. Without stumbling upon remote real estate investing… we would have never been able to grow. We have invested in 14 different markets across the United States, and it’s been the best decision of our lives to branch out and find opportunities out of state.

 

Remote real estate investing is the simple process of finding the right cashflow markets online, doing research on those markets, and then finding deals. It’s not as complicated as you might think it is, in fact, it’s actually easier in most situations! 

 

Instead of sitting around and waiting for deals and the markets to turn, you go out and find solid cashflow markets to invest in...no waiting!  You don’t want to buy in super competitive sellers’ markets, because when the tides turn you might be left with a return on investment you are not happy with. 

 

Our process is simple, and only requires a laptop, a phone, WIFI, and a nice hot cup of coffee. We invest in markets where the tides are RIGHT to invest in, prices are low, and where’s there’s lots of opportunities to invest. So when the tides change, we are left with a competitive edge and the right numbers. 

 

Here’s why we prefer remote investing over hometown investing: 

 

  1. It allows you to branch out, and diversify into many different opportunity markets.
  2. You can find deals quicker, because you are NOT limited to just one market. 
  3. You can find BETTER deals, because your options are open and you have tons of different opportunities to look at. 
  4. You can live wherever you want. 
  5. You do not have to “wait” for the right deals, you go out and attack them.
  6. It allows you to invest in cash flow markets you don’t have to live in. 
  7. It provides you with strong and consistent dealflow, so you can grow your portfolio even faster! (Without getting bogged down by waiting periods of competitive sellers markets.)

 

You are not alone if it’s felt like you have been waiting FOREVER to find that “right deal”... so don’t be hard on yourself.

 

We have been in the longest bull-market in the history of the USA. Plus, interest rates are low and everyone is trying to get into real estate.  So don’t be surprised when the only thing you see is too much money invested and not enough return. 

 

Remote Investing allows you to have endless dealflow, without the waiting game. 



But, without a system, it can get pretty complicated. For us, we’ve simplified things by breaking our system down to 4 steps...Select, Investigate, Close, Manage.  We use this system for all of our acquisitions, whether we are buying apartment buildings, small multifamily (2-4 units), doing BRRR deals, or even wholesaling. 

 

So, let’s break down each of these steps. Obviously there are a lot of details that one article won’t delve into, but we hope this will give you an idea of how this is doable for you...so you can continue building your portfolio, even if your hometown market isn’t giving you the deals you want.



STEP #1: SELECT

Now follow along and pay attention here, because this is the exact “rinse and repeat” process we’ve used for 17 years that helped us build our multi-million dollar portfolio.

 

Step 1 is simple. SELECT.  In the Select Phase, we are selecting our markets, our team and getting dealflow coming in.

 

Selecting a market...the first step is to research different markets. Once you go out and do your research and weigh the pros and cons, you select a market to look into. Side note: Can you browse deals from multiple different markets at the same time? Yes! But, like anything else, it takes time and practice to really understand a market. So start small and branch out as you go. 

 

Do some market research based on your investment strategy, and then choose a solid cashflow market to start looking into. If you are looking at buying 2-4 unit properties, you markets that have steady or growing populations and job growth AND meet the 1% rule.  For apartments, we are also looking at population and job growth, but are also evaluating the market cap rates and whether they’re a fit for what we are trying to accomplish with our investing strategy (stabilized vs. value add).

 

Once you’ve selected a market, you’re going to start building your team, professionals local to your chosen market.  You’ll be finding and interviewing realtors/brokers, general contractors (if rehabbing), inspectors and property managers.

 

We use realtors and brokers to create the majority of our deal flow.  Once we have deals coming in, you can move to Step 2 - Investigate!



STEP #2: INVESTIGATE

Once you select the market(s) you want to invest in, put your team in place and have deal flow, you’ll start crunching numbers and making offers!

 

Then...OFFERS, OFFERS, OFFERS...until you get one accepted.

 

Next - Due Diligence!

 

During your inspection period, you’re going to be investigating everything about the property - the ARV and how much renovation it needs (if applicable), the current rents, the market rents, what is the actual condition of the property (from our independent ASHI certified home inspector’s point of view).

 

You’re basically finding out what is “real” about your real estate deal.  And there are three potential next steps:

  1. Everything looks good...and you’re moving forward.
  2. Things are not as good as you thought...and you request a price reduction.
  3. Things are NO BUENO...If it doesn’t work out how you like, simply just walk away! There’s nothing like the power of saying “NO” in a negotiation. When you back out of the deal within your inspection period, you get your earnest money deposit back. 



STEP #3: CLOSE 

This one is simple, because you did all of the hard work already! (Like sitting in the comfort of your own home and searching for great deals is really “hard” work.)

 

The Close Phase of our process includes Pre-Closing and Closing.

 

Pre-Closing includes all the things you do in between the inspection period ending and the deed becoming yours...things like getting your financing in order, getting your insurance setup, signing agreements with your contractor and property manager, getting everything needed to the title company (like your LLC docs).  We like to refer to this phase as the “herding cats” phase.  And if you’ve closed on real estate before, and if you’re in AAOA I’m guessing you have, you know what I’m talking about.  It’s a little chaotic...but that part is no different whether you’re investing at home or remotely.

 

So, what about closing?

 

You’re probably pretty accustomed to going (in person) to the title company to close.  So, how does it work when you’re doing it remotely?

 

There are two ways, and it’s largely up to the lender and title company:

  1. The title company can email you the closing package.  You print it.  Sign everything that does not require a notary and take the handful of pages that DO require a notary to your local bank to get notarized.  You then overnight the package back to the title company with the label they provided.  Easier than you thought? 
  2. The title company can hire a mobile notary in your hometown.  They will email them the file.  The notary will schedule a time to meet you at home (or wherever you choose).  You’ll sign all docs in front of the notary and they’ll send the signed package back overnight to the title company.

 

Either way...it’s pretty dang simple.  Of course, you’ll need to wire your closing funds to the title company, but that’s standard.  When was the last time you walked into a closing with a suitcase of cash?  LOL

 

The funny thing is...closing is a little anti-climatic, but you still close.  You still now own another property.  Life is good!



STEP #4: MANAGE 

The last step, manage, will be different depending on what your strategy is.  If you’re buying a performing, stabilized building, the manage step relates to “managing the manager” - getting all of the information to your property manager (security deposits, leases, etc).  If you’re buying a rehab property, the manage step starts with managing the rehab...once the renovations are complete, it’s managing the manager.

 

I remember when I was a new investor and heard the term “passive income”.  I misunderstood the term to mean I would be COMPLETELY passive.  Well, that’s never going to be the case.  MOST of the activities are passive, but the one thing you always need to do for your business is keep your finger on the pulse of it.  How do you do that?  By reviewing the monthly property management reports, paying attention to everything on it (particularly maintenance & repairs) and asking your property management company about any expense you’re not aware of.  Not only will it give you information about what’s going on at your property, it lets the property manager know you’re paying attention, which reduces the risk of them running unnecessary expenses through your P&L statement.

 



Whew!  I know that’s a lot of information...and of course, it’s just an overview.  And if you can take that information and allow it to start opening your mind to investing in a new way...a way that will allow you to expand your portfolio, make better purchases and ultimately create the time and location freedom that SHOULD be accompanying the financial freedom you’re creating!

 

We’d love to invite you to join our facebook group (Multifamily Real Estate Investing Group)...we do lots of free education about investing in real estate and have a weekly live “Ask Us Anything” to help get your questions answered to keep moving forward and building your real estate empire!

Til next time, 

-Jen and Stacy

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