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REAL ESTATE Rental Home in a Distant City, Sight UNSEEN??

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natew

Bronze Contributor
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I've Read UNSCRIPTED
Jul 12, 2011
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Los Angeles, CA
Hello Everybody,

I'm seeking advice from those who may have more experience in this area or have already addressed this question.

Here is a brief introduction. While working a professional day job and looking to expand my family's means, I got into writing/self-publishing as a potential Fastlane business. It has grown somewhat, and has scaled up just a bit over the years. At the same time, my wife and I were carrying out an unwitting Fastlane business: real estate. We owned a home that kept increasing in value, despite being a money pit for us. After years of struggling with our property taxes, roof damage, plumbing repairs, rats, and things that kept breaking down in a 90+-year-old house, we recently sold it. After the escrow closed, we paid off credit card debts and other debts, and are now sitting on a nice, tidy sum.

In a short time, my wife and I catapulted from a struggle to a much greater degree of material ease. Though not quite at $1,000,000, we are closer to that level than ever before. Now, when we need simple things like new shoes towels, we can actually afford them. Obviously, letting our money just sit in a savings account indefinitely is not a great idea, so we're looking into better options. The material that @MJDemarco provided in UNSCRIPTED is great information. We're also considering real estate as a possibility.

We have learned of an opportunity to purchase investment property in another city, where housing is a lot cheaper than in our city. For a pretty small percentage of our current savings, we can buy a house in the other city - with no mortgage - and charge tenants around $1,000-$2,000 per month in rent. Presumably, a property management company would take care of maintenance issues, so we would have to pay them something. Still, we may take in $500 or $600/month in profit.

The questions are:
1. Is it worth the investment, or is it a better idea to focus on market investment (ETFs or other products)?
2. If it's worth the investment, then what percentage of investment do we place into markets and what fraction goes into real estate? Maybe two or three houses would be a good idea.
3. Is it smart to purchase real estate in a distant location, sight unseen?

A possible risk factor may be the difficulty in getting tenants. I have no knowledge of the real estate supply vs. demand in the other city, and it would be a shame to drop $100,000 for a house that nobody occupies. On the other hand, maybe there is a high demand for housing in the other city, and finding tenants will be no problem.

I'm also skittish about real estate investment for rental income, because my parents tried it around 30 years ago, and were cheated. Their tenants didn't like the idea of paying rent, and the local regulations favored tenants; in the end, it was a losing proposition. However, the circumstances in this case may be more favorable.

Lastly, how has the COVID-19 epidemic impacted the real estate market? Are people still interested in initiating new rentals?

Please forgive the novice nature of this post and the questions. I am new to possessing wealth at this scale, and new to investing in a serious way. If you have experience in this area, and can provide some insight or advice, please reply. I would appreciate any information that can help us make the best decision.

Thank you.
 

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Last edited:

Paul K

New Contributor
Read Millionaire Fastlane
Nov 18, 2019
7
5
14
Hello Everybody,

I'm seeking advice from those who may have more experience in this area or have already addressed this question.

Here is a brief introduction. While working a professional day job and looking to expand my family's means, I got into writing/self-publishing as a potential Fastlane business. It has grown somewhat, and has scaled up just a bit over the years. At the same time, my wife and I were carrying out an unwitting Fastlane business: real estate. We owned a home that kept increasing in value, despite being a money pit for us. After years of struggling with our property taxes, roof damage, plumbing repairs, rats, and things that kept breaking down in a 90+-year-old house, we recently sold it. After the escrow closed, we paid off credit card debts and other debts, and are now sitting on a nice, tidy sum.

In a short time, my wife and I catapulted from a struggle to a much greater degree of material ease. Though not quite at $1,000,000, we are closer to that level than ever before. Now, when we need simple things like new shoes towels, we can actually afford them. Obviously, letting our money just sit in a savings account indefinitely is not a great idea, so we're looking into better options. The material that @MJDemarco provided in UNSCRIPTED is great information. We're also considering real estate as a possibility.

We have learned of an opportunity to purchase investment property in another city, where housing is a lot cheaper than in our city. For a pretty small percentage of our current savings, we can buy a house in the other city - with no mortgage - and charge tenants around $1,000-$2,000 per month in rent. Presumably, a property management company would take care of maintenance issues, so we would have to pay them something. Still, we may take in $500 or $600/month in profit.

The questions are:
1. Is it worth the investment, or is it a better idea to focus on market investment (ETFs or other products)?
2. If it's worth the investment, then what percentage of investment do we place into markets and what fraction goes into real estate? Maybe two or three houses would be a good idea.
3. Is it smart to purchase real estate in a distant location, sight unseen?

A possible risk factor may be the difficulty in getting tenants. I have no knowledge of the real estate supply vs. demand in the other city, and it would be a shame to drop $100,000 for a house that nobody occupies. On the other hand, maybe there is a high demand for housing in the other city, and finding tenants will be no problem.

I'm also skittish about real estate investment for rental income, because my parents tried it around 30 years ago, and were cheated. Their tenants didn't like the idea of paying rent, and the local regulations favored tenants; in the end, it was a losing proposition. However, the circumstances in this case may be more favorable.

Lastly, how has the COVID-19 epidemic impacted the real estate market? Are people still interested in initiating new rentals?

Please forgive the novice nature of this post and the questions. I am new to possessing wealth at this scale, and new to investing in a serious way. If you have experience in this area, and can provide some insight or advice, please reply. I would appreciate any information that can help us make the best decision.

Thank you.
Hi Nate, I have been investing in Real Estate for over 30 years. I own over a hundred units in apartments and single family homes, duplexes etc. I am a Canadian but most of my holdings are in the States. It is an excellent way to make you wealthy and its fun. One key is due dilligence. Thats how I make my money. Its about risk mitigation. Less risk better return. Once you get good at this it is virtually clear sailing towards building a massive money machine. It is a great time for Real estate investing as there are goimg to be lots of deals. I recommend you start your learning journey now so that you can reap the benefits shortly. If you wanted you could be on your way in as little as 90 days. If you would like to chat I can help. paulkrane@gmail.com.
 

Bekit

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
Summit Attendee
Speedway Pass
Aug 13, 2018
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Hey Nate, there's a fair amount of discussion about this here:
 

REIguy

New Contributor
Read Millionaire Fastlane
May 3, 2020
7
6
14
Maryland
Due diligence is key whether you're buying in your market or out of market. If you can't personally put eyes on the property, you could pay someone, maybe a real estate agent to view the property, take video and give you a market analysis of rent and value. As a new investor, I'd suggest you have a home inspection done. There's going to plenty of scary things on that report, there always is. But don't worry about the multitude of minor issues, you want it to catch the big money issues. They can also give you an idea of the current age and expected life of things like HVAC, roof, etc.
 

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