I honestly don’t know how other long distance real estate investors handle work orders from their tenants.
I wrote a blog previously about how valuable having a property manager has been to my team.
Today, I received a text from my Property Manager. I’m thinking a bunch of things like is the tenant okay, was there storm damage from Hurricane Ida, etc.
Low and behold, it was about the stove. The stove wasn’t connected properly and a part burned out. Go figure!
No one was injured. The property is still standing. The stove has been repaired and I reimbursed her the amount that she paid for the part. Luckily, I purchased warranties on all the appliances I purchased or that may have hurt my feelings and my pockets. 😂
My advice to anyone who is considering buying long distance real estate rentals or just investing in rentals in your neighborhood, try looking into getting a property manager. The service they provide to you is worth the money.
Back in 2019, I decided to invest in a rental property in Detroit, MI with an investment club. I found the leader of the group via YouTube. I had been watching her videos for a year and I liked the information she was putting out regarding business and making your money work for you.
I know there are questions people want answers to like:
1. How do you know if you can trust that person?
2. How often will you receive your portion of the profits?
3. How long will you own the property?
Truth, I didn’t know if I could truly trust that person, but we have a contract signed with all owners that lays out everyone’s percentage and how often monies will be disbursed. There is also a clause about what happens to the property after so many years. When you think about, even if I had a personal relationship with this group of investors, I would still want a contract.
Fast Forward to Present Day!
I’d like to say that it’s been a learning experience for sure. Some things have gone well and some things have gone not so well. Let me just say, I’m so glad I didn’t pay a whole lot of money.
First, we didn’t really get payouts every quarter because the tenant stopped paying rent. Yes, before the pandemic happened the tenant stopped paying rent. It’s a sad situation because the group is being told that the tenant is not affected by Covid-19. She’s still working and not paying rent.
The owner of the investment club posted a video on YouTube about the experience. I’m linking it below
One of the things, that I found to be tough as I began my real estate investment journey was building my team. It’s something that I still struggle with today and it’s partly because I don’t live in the areas I invest in.
As a newbie real estate investor, you hear people say, you have to build a team and you’re like okay. That involves a variety of people with different skill sets. Since I invest in Mississippi and I don’t currently live there, I had to network via Facebook. I was fortunate to reach out to a couple of people who came across my Facebook newsfeed from the area I am investing in who were also investors in the city and had connections and contacts and didn’t mind sharing. Of course there are other ways to connect with people via the internet and other social media platforms. On my first property, I knew I was going to need a Contractor, an Insurance Agent and a Property Manager. I thought that would be my team and I was good.
But later I found out that, building a team involves a lot more people. In order to grow the business, I’m going to need several Contractors, not just one, a Property Manager, a Realtor, an Insurance Agent, and a Lender, and a few people in my life to talk to when I need to vent or bounce ideas off of. It’s a whole system of people who I can rely on to get the things I need that will help me reach my goals. Of course I read a couple of books about it and one of the best ones, I read that helped me is Long Distance Real Estate Investing by David Greene.
It’s not an easy thing to do and it will take some trial and error, but I know once I’ve gotten my team down solid, the sky is the limit and at that point.
When you think about rehabbing a project, one of the things that may come to your mind is HGTV. Of course, you have watched tons of HGTV shows and they show you how they are doing demo and encountering an issue here and there, but is that really what happens when “YOU DO IT”.
Uuuuhhh yes and no. Yes demo and issues happen when doing doing a renovation, but what those tv shows don’t show you is how it all starts. I’m going to break down my experience as a newbie real estate investor and explain the process I went through.
After the paperwork was signed and I officially owned the property. I followed these steps.
Step 2. Put together a list of questions for the contractor. I included, things like are you insured, licensed, do you work on weekends, etc.
Step 3. Meet with contractors to do a walk-through of the property and get quotes and references.
Step 4. Sign the contract of the contractor and pay a deposit
I failed to follow steps 2 and 3 more thoroughly. In step 2, because of the rural area, the rehab was in, I found that lot of contractors were actually handy men. Some of them were not even registered with the state as an official business. In step 3, and this one may have saved me thousands of dollars, I didn’t call and check references of work they had done previously. I was impatient and it cost more money.
Looking back, I definitely realized that my process needs refinement, but now that the property is rented, I’m happy that I have lessons learned so that I can apply them moving forward.
In my interview with Coach Carson, we discussed my successes and losses with contractors. Please click on the link below for more details.