Aspiring real estate investors are under the impression that they have to travel to the property and inspect it before they get it under their control. Not surprisingly, they tend to invest in areas that are convenient for them to drive to.
So when people learn that I invest in real estate while sipping cappuccinos in Barcelona or sailing through Venice on a gondola or enjoying the view from the 56th floor of a luxurious Singapore hotel, they wonder how I can invest in real estate if I haven't seen the property.
How do I know if the property is in good shape?
How do I know that the property is even there?!?
You don't have to be a world-traveling real estate investor to invest without seeing the property in person... but most new investors tend to stick close to home. If you can fix the misconception that you HAVE to view the property in person then you'll open up the possibility of investing anywhere. That's true virtual investing!
How to invest in real estate without seeing the property in person (It's easier than you think)
If you are investing to wholesale the property to another investor, remember that your preliminary view the property is only part of the due diligence that will be done on the property. The prospective buyer will rely on the information you provide them but will, of course, do their own due diligence. You just need to know enough about the property to make sure that you can get it at a discount and you can wholesale the deal to another investor for a great deal.
Here's how you gather that information:
- The seller will tell you a lot. Probably more than you realize. Yes, sometimes sellers don't always tell the truth and they don't always have the most accurate ideas but it's in their interest to give you accurate information (or else the deal won't get done). However, the important thing is: You need to ask. By asking the right questions, you can get a pretty good idea about the property. Ask how old the property is; ask if they live there or if it's rented; ask about the number of bedrooms and bathrooms the house has. Don't ask subjective questions like "Is the roof in good shape?". Instead, ask fact-based questions like "When was the last time the roof was reshingled?"
- Check MLS and local tax information to see what other houses nearby are valued at and assessed at. (Remember: Assessed value rarely means actual value, but the assessed value still helps you to compare different houses in the same neighborhood). The MLS will also show you how many houses are for sale by a real estate agent in the area.
- Look on GoogleMaps to see what else is in the neighborhood. Take a virtual "drive" down the street using GoogleMaps Street View to see what the neighborhood is like. Google Maps might not be current (sometimes it can be a couple of years old) but neighborhoods don't change that much – you'll get an idea of how your potential investment compares to other houses in the neighborhood and if the houses in the neighborhood are well kept. Keep an eye on what kind of cars people drive, how well-kept the lawns are, and what kind of potential person the neighborhood might be ideal for – young families or retired people or lower-income, etc. (Of course, you're not selling to buyers who will live there but your investor-buyer will want to know this information)
- Put an ad in Craigslist or a local newspaper (or both) and find someone who might like to earn some extra money by helping you. (Often you might get an aspiring birddogger who you might be able to work with in the future! Birddogs are part of a successful real estate investor's team). Pay them a small amount of money to visit the property with a camera. Let the seller know that you're going to send someone by who will check out the property on your behalf. They should bring a camera and take pictures and video of the property – inside the house and outside. Give them a checklist of things they need to take pictures of and how you want the video shot to show case the property for you. You can then use these pictures to assess the condition of the property as well as marketing the property to your investor buyers while you sit at home or on the beach!
And that's all you really need to do. Between all of those pieces of information, you have more than enough to decide if it's a deal you want to move forward with. If it is a deal you want to do, you can offer the deal to your investor-buyers and they will be the ones to go on and do their own due diligence, which might include hiring a home inspection or a contractor to look into the property. But what I've described above is an easy way to control the property without seeing it in person and getting an assessment virtually.
So, if your previous investing has been limited to an area within driving distance from your house, or if you have been held back from investing because you can't easily get to the places you want to invest, there's good news! You are no longer limited by this! We live in such an amazing time of technology and opportunity that you can gain a lot of information without you actually having to be present at the property.
Your friend and mentor,
Mark Evans DM,DN
PS, If you've invested in properties in the past without seeing them and you have a tool or technique that has helped you do it successfully, why not list it in the comments below. Let's help each other out by sharing great ideas!