Over the last few years I’ve bought several rental properties, but I’ve never personally been inside any of them. I don’t think physically seeing the properties adds any real value. Instead, I use technology and a team of skilled experts to help me invest in real estate. Here’s what I’ve learned:
The first thing that I need when I’m looking to buy in a new area is a team of local experts. My team consists of five key players:
- Home Inspector
- Property Manager
My realtor is really the most important person on the team. They help me identify good neighborhoods to invest in, tour properties that may be good deals, and write and negotiate offers for me. They also take care of all of the details to get the contract to closing.
Typically, I will look at hundreds of deals online before I find one that I’m interested in. When a property meets my criteria, I’ll send my realtor over to the property to virtually show me the property on FaceTime. I can get a general idea of the condition of the property and the work that needs to be done to the property by doing a virtual tour.
After seeing the property over FaceTime, I’ll decide if I’m interested in purchasing the property. If so, I’ll come up with a price that I’m willing to offer for the property, and my realtor will submit the offer. After the offer is accepted, I’ll usually have a week or two to do my due diligence.
I don’t think it necessary for me to physically be at the property. I’m not buying this property to personally live in. I want to know what I’m buying, and I can get a pretty good feel for the property virtually.
The first thing I schedule is a time for my home inspector do a detailed inspection of the property. He’ll spend a few hours going through the property and will provide me with a detailed report showing me a description (with pics) of everything that needs to be addressed with the property.
I don’t think I need to be present for the home inspection. I don’t know a lot about construction. The inspector is the expert in inspecting houses, I just let him do his job.
After reading his report, I’ll usually call him to clarify a few issues and to get his opinion on how serious any issues are.
After figuring out what needs to be fixed prior to renting the property, I’ll have my contractor tour the property to give me a quote to repair the issues, as well as a quote to do any additional work that I may want to do to the property.
I don’t think I need to physically meet the contractor. I can email him the home inspection report, and we can talk on FaceTime if he needs to show me something while he is at the property.
After I have the estimate from the contractor, there may be a second opportunity to negotiate with the sellers. We may go back to the seller asking for a credit, or for the seller to have the issues fixed before closing.
My property manager is another really important person to keep in the loop during the entire process. After closing, I will be turning the property over to them to find a tenant and to do the day to day management of the property. They don’t want me to buy a property that is going to be difficult for them to manage, because it is going to end up being a headache for them.
I will consult on the phone with my property manager several times during the buying process. Before I make an offer, I will get their opinion on the neighborhood and to confirm my rental price estimate. Second, I will have them tour the property during the inspection period, to have another set of eyes look for issues that may need to be addressed.
Their opinion is really important to me because they know what potential tenants are looking for in a rental. For example, my home inspector will tell me if a light fixture is working or not. But, my property manager will be able to tell me if tenants are going to be looking for a newer light fixture, or if the current one will be fine.
Finally, I will have them tour the rental again after my contractor has finished any repairs to make sure all the repairs were completed correctly. We will also look at the current market conditions and decide on the final price they are going to market the rental for.
My loan officer is another key person on my team. They are going to make sure I can get the financing to purchase the property before I even start looking. They are responsible for making sure the loan underwriters have all the documentation they are going to need to approve the loan. They also order the appraisal and make sure that the financing is in place for me to close on the property. I usually work with my lender over the phone and email.
We live in a really exciting time. It probably would have been a bad idea to purchase a property without personally seeing it just a few years ago. The internet has made purchasing a property a lot easier. There is so much information available online, and technology available at our fingertips today. It does take some time and effort to build a great team. But, as soon as you surround yourself with great people, it becomes a lot easier to become a great investor.
Originally published on Groundwork