“Is Rehabbing Remotely Something I Should Even Do?”

rehabHey Insiders – Patrick and JP here…

You know, we love taking questions from our members, because oftentimes, what one person asks is the very thing others may be wondering but have not asked. In this Q&A lesson, our question comes from Michelle:

“Real estate is a catalyst for my dreams, including several other businesses, in order to quit my job. I home school my children, so I want to have time for that. My biggest issues right now seem to be not enough good leads, wanting to flip remotely but lacking the experience, and getting private funding. My question to you now is, how do you find people you can trust if rehabbing remotely (such as a project manager, etc.). Also, what do you do to pay them?”

jp-patrick-circle-bigMichelle’s question is multi-faceted, and you can see from our title that we didn’t directly answer all points of the question.

You’ll find out why in a moment…

Tag Team
Read on as JP and I tag team this lesson…

Locating Team Members

One of the best ways to find team members that you can rely on and trust explicitly, is through referrals. This not an easy thing to do when you’re working out-of-market. But one thing you might consider doing is to connect with the leader of the local REIA group. This could be a great source of direct referrals.

Next, we’d suggest that you do deeper online research to find out what investors in that market are doing. If you find active investors in the area, you might also be able to work with them. For instance, the investor you connect with may have a great contractor who’s between jobs, in which case they might refer that trusted contractor to you.

Back Things Up a Bit

Perhaps we should just back up for a moment and do a little closer scrutiny into what’s being asked here… Perhaps, Michelle, we should caution you against trying to work remotely at this time.

You did mention that you’re lacking in experience. This may indicate that you’re green enough that rehabbing properties from afar might prove to be a high-risk proposition. This is not really the best low-hanging fruit way to get started in real estate investing.

This might not be the advice you’re wanting to hear, but we would strongly advise you to reconsider that strategy entirely. Can you rehab houses remotely? Yes, you can. We, personally, have not had any experience doing it, but we do know a few people who have.

The ones who we know who have taken this route are experienced investors who already have private funding in place and understand the workings of a rehab project. But they started out and gained this knowledge, working with properties that were in their local market. They learned by actually going and meeting one-on-one with contractors, and in that way, they could personally screen their contractors.

connectionNeeded Connections

If you were to do rehabbing in a remote market, you should probably find a market where you already have connections. You know someone who lives in that market who can be your eyes and ears. One who could check out any of the properties you find.

Perhaps a better plan might be to wholesale properties remotely as opposed to rehabbing. It’s easier to get to know a market by wholesaling or even joint venture wholesaling.

When we’ve done wholesaling remotely, we admit it’s been a little bit of a pain. A few years ago when the market was really going strong in Phoenix, we had a friend who lived there and he was the one who was looking at the houses and meeting with the people. He was the person whom we trusted to find the qualified team members to get done what needed to get done. So the best way to do it and do it right, is to have a trusted partner who is right there.

Boots on the Ground

Another investor that we know who is successful in investing remotely flies out to her remote market at least once a month. She then spends 3 or 4 days looking over properties and observing the market firsthand. It’s hard to replace personal contact, and seeing what you can see only when you’re there in person.

On one of her trips, she hired a foreman for her projects. He then became her eyes and ears in that place. It is possible to make big decisions from afar, as long as you have someone you can trust who is right there.

Another investor friend goes into a selected market – an area he knows nothing about – then spends several days there. He’s totally focused on that area; he talks to Realtors in an attempt to find the Realtor who specializes in the area he’s most interested in. And he’s also there making deals happen. When he leaves after about 4 days, he’s got everything lined up.

powerBottom Line…

I hope, Michelle, that this isn’t scaring you off as a new investor, but maybe there’s enough information here to help you make the best decision to help your business grow.

As you can see by our answers, your course of action may be to take a step back and reassess your business model. What will your niche be and what steps will you take to make that happen?
Once you have that established, then you can more clearly answer the question whether or not remote investing will be the route for you to take.

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