Long-Distance Real Estate Investing (Part One)

Living in Toronto and working a full-time job while managing rental properties in Windsor is the absolute worst. Driving down to fix plumbing issues and getting midnight calls from tenants is a nightmare. Driving four hours for the management of my properties is unsustainable and as a result, I hope to eventually sell my entire holding in the upcoming year.

This is the perception that many people get when I tell them that I am investing in a city that is 4 hours away from my home town. The reality is that no matter what issues come up, I can deal with it through a couple phone calls, emails, or text messages. I do NOT drive down to Windsor to manage my tenants. I do not try and maintain the properties myself.

If you are managing your real estate portfolio yourself, the reality is that you could only scale up to 4 or 5 properties before the day-to-day management becomes overwhelming. The key to investing long-distance is building a real estate power team.

As an investor, you want to work on growing your real estate business. Do not work in your business, instead work on your business. The key to this is building a power team. Every investor should work on treating real estate as a business, not just a one off investment. By taking this approach, you can invest in any city, regardless of the distance. I am not the first investor to invest long-distance, nor am I the last investor to do this. The truth is that anyone can do this if they spend a couple months building a strong management team that they can rely on.

Think about the company you work for currently. Does your CEO worry about the day-to-day tasks of pulling data, invoicing, and small hiccups in your particular department? No, because realistically the CEO is more concerned with the vision of the company and is focused on growing it. The CEO probably doesn't even know what you do on a day-to-day basis, but he or she has an idea of the purpose that your business function serves to the business. Real estate should be treated no differently! You are the CEO of your business.

Now you might be asking, how do I build my power team? Who is involved in my power team? How do I get started?

In this article, I get into the important members that are essential to building a real estate power team.

1) Real Estate Agent

2) Wholesaler

3) Lenders/ Mortgage Broker

4) Accountant

5) Lawyer

6) Property Manager

7) Handyman

8) Contractor

9) Local Friends/Investors

10) Insurance Broker

Where to Get Started?

Each team member can be found by networking with others and leveraging other people's resources. Find a local meet-up in the city you want to invest in or browse online for some forums to find an investor that is investing in your target market. Chances are you are not the first investor looking to buy a rental property in the city, so your job is to find other investors who are currently accomplishing what you hope to invest in. Ask these investors for referrals. Typically the real estate agent is the best way to start. When you find a great agent, typically they have a power team set up for you. They should be connected with brokers, contractors, property management companies, inspectors etc. Although you shouldn't rely 100% on your agent's power team, it is a great way to get started to build your team and you may find that some of your real estate agent's team member become permanent fixtures on your team as well.

Go out to networking events and build a connection with at least 3 to 5 individuals in each category. Either be connected with them by a referral from other investors that can vouch for the team member or by meeting them personally at an event. Also, you can ask for recommendation of investor Facebook groups or other online communities. Make sure to get on a call with your potential members and vet them out. No single team member should be doing more than 2 functions in your business nor should you become extremely reliant on one individual. Think about your business. You don't want your realtor to also be your accountant and lawyer, that's going to be a recipe for disaster.

Criteria

You can't just trust anyone to be on your team. You need reliable team members who can help you execute your vision. Typically I look for team members that:

• Have invested in real estate experience and have at least 3+ investment properties of their own. That way they know how to think like an investor and have experience managing things from an investor's point of view
• They understand your vision, and have helped other investors achieve the same vision
• They understand your investment criteria
• Have helped other investors manage their real estate business long-distance
• Provide reference checks and have a previous track record
• Have an incentive to help you grow your business

Do not work with a family member or friend just to help them out! This is a common mistake that many investors make. Just because a team member is a family or friend, doesn't mean that they best serve your interest or that they can help you meet your particular goals. Remember this is a business! If you were a CEO of a company, you wouldn't hire an unqualified family member to work for you on the sole basis that you have a personal relationship with them.

Also, do not rush into a relationship! Too many investors are too lazy to perform the due diligence process and will just work with the first person they come into contact with. I've done this before, and I can confidently say that this is the biggest mistake I've made in real estate to this date. It can be extremely costly and stressful for you if things do not work out well. It might even take you out of the real estate game for a while if you have a terrible first experience.

Hope you enjoyed this quick introduction on building investing long-distance. In the next article, we will take a deeper dive into building the power team so that you too can get started on building your real estate empire! There's no need to invest in the city that you live in, especially if the numbers don't work out. Cash flow and equity pay down should always be your priority. Appreciation will be treated as the cherry on top. If you follow the steps laid out on this article, you are well on your way to building a business instead of working in your business.