Most people think that you have to see a property before you buy it. I agree that it's probably a good idea for most people to see a property before they buy it. But, that's not what I personally do. I've actually never been inside any of my rentals….and I probably never will.
If you wanted to buy stock in Amazon or Apple, would you personally visit their headquarters to decide if you were going to buy the stock?
I'm not even sure if any companies would allow you to visit, if you wanted to.
Instead, you would probably do some research online or maybe talk to a financial advisor. Then you would use an online brokerage to buy the stock.
When you buy a stock your role is to be a passive investor. The management team at the company is going to manage the company as they see fit. They really don't want your input.
The upside is that you have no responsibility and you will never have any work to do. The downside is that you don't have any control. You can't call the CEO or go to board meetings to help decide the direction of the company, or to give suggestions on better ways to do things.
You will make money, or lose money, depending on the performance of the company, and the mood of Wall Street. But, it's totally 100% out of your control.
With rental real estate, you have total control. You can decide the type of property you buy, who you are going to rent to, what the rent is going to be, and the condition that you want the property to be in.
Most people think that the trade off of having all the all the control means that it's going to take a lot of your time.
Personally, I don't want to make that trade off. I want my rentals to be totally passive, and to provide stable monthly income, but also I still want to have control.
How do I do this? I have put together a trusted team of experts (that are more knowledgeable in their field than I am). They carry out their specific tasks, and give me their input. But, I'm 100% in control and have the final say in everything that happens.
In this article, I'm going to outline the roles of the members of my team.
My team consists of five key players:
- Real Estate Agent
- Home Inspector
- Property Manager
Real Estate Agent
My real estate agent is really the most important person on my 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 ask my agent to personally go to the property to take a look at it.
While they are there, they will virtually show me the property. We will connect on a video conferencing app, and take me on a tour of the property. I can get a pretty good idea of the condition of the property and determine if any rehab work will need to be done both from what I can see and from the feedback from my Realtor.
After “seeing” the property, 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's 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.
When I write the offer, I always put a home inspection contingency in the offer. This will give me a week or two to get a detailed inspection of the property. My inspector will 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.
My inspector is an expert at construction, I'm not. I don’t think I need to be present for the home inspection. There is no real value that my presence will add. I let my inspector do his job, and he will provide me with the information that I need to get the condition of the property.
After reviewing the 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 a couple of contractors take a look at the property to give me a bid to repair any issues that need to fixed prior to renting the property, and to quote any upgrades that I may want to do to the property.
I don’t think I need to physically meet the contractor. We can talk on the phone or email, and if they need more information about something, I can send them a copy of the home inspection report or even have them talk to the inspector
After I have the estimates from the contractors, there is usually an opportunity to negotiate with the seller. I may go back to the seller asking for a credit, or for the seller to have the issues fixed before I close on the property.
But, all of my involvement can be done over the phone or email.
My property manager is another key role on my team. After I close on the property, I will be turning the property over to them to find a good tenant and for the day to day management of the property.
My property manager doesn'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. They want me to buy a good property in a good neighborhood that is going to be easy for them to manage.
I will talk to 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 estimate is reasonable. 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 before they rent the property.
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, and that the property looks ready to show to potential tenants.
I will also look at the current market conditions with them before we put the rental on the market, to decide on the final price they are going to market the rental for. Sometimes this can go up or down a little depending on market conditions.
I don't need to be at the property to meet my property manager. They can go over and tour the property when they have time, and we can set up a time to talk after they have been to the property.
My lender is another key person on my team. They are going to make sure I can get the financing to purchase the property. 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 work with my lender over the phone and email. If you are looking for a good lender, check, out my resources page.
We live in an exciting time! This probably would have been a really 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 a little time and effort upfront to build a great team. But, if you surround yourself with great people, it becomes a lot easier to become a great investor.
What Do You Think? Is It A Good Or A Bad Idea To Buy Properties Without Personally Seeing Them? Let Me Know In The Comments below.
P.s. If you want to learn more about buying a rental property remotely, here are a few resources:
- How They Remotely Manage Rentals In Canada While Living In The US (podcast)
- How She Self-Manages Her Rentals From 3,000 Miles Away (podcast)
- 5 Steps To Buy Your First Rental (ebook)
- Rental Income For Beginners (course)
You can also get tips to buy your first rental sent to your email – just add your email to the form below!