It’s the dream, isn’t it? Having a long-distance real estate investing business…
To build a thriving real estate investing business, one that easily supports you and your family, one that you can manage from anywhere in the world.
You could be in the Bahamas with a laptop, phone, and WiFi, building your business, or you could be sitting on the couch at home…
That is the freedom of building a long-distance real estate investing business.
But… is it really possible to build something like that?
Well, plenty of investors have done it — and we’re going to show you the steps for building your own long-distance real estate investing business.
But first, here’s a preview of what’s coming up.
- Pros & Cons of Long-Distance Real Estate Investing
- Step #1: Choose a Market
- Step #2: Build Relationships With Local Real Estate Experts
- Step #3: Find Trustworthy Contractors
- Step #4: Vet and Hire a Property Management Company
- Step #5: Set Up Clear-Cut Processes
- How To Structure Your Long-Distance Real Estate Investing Business
- What Positions to Hire For Your Long-Distance Real Estate Investing Business
- Step #6: Avoid These 5 Long-Distance Real Estate Investing Blunders
- 3 Ways That Call Porter Can Help You Grow Your Long-Distance Real Estate Investing Business
Pros & Cons of Long-Distance Real Estate Investing
- You have access to the best real estate markets in the U.S. — When you’re building a long-distance real estate investing business, you have your pick of any market in the U.S. You’re not limited to the market in your own backyard, which may or may not be a fit for what you’re wanting to do. Since you have access to any market that you want to operate in, you can choose the best market in the country for what you’re wanting to do, which is certainly an advantage over local investors.
- You have the freedom to work wherever you want — This is the best part about long-distance real estate investing. If you’re like most ambitious entrepreneurs, you don’t just want to build a business for the sake of building a business, you want freedom. And long-distance real estate investing often provides more freedom upfront than local real estate investing, if for no other reason than your business is built to operate largely without you and you can manage it from anywhere in the world if you have a laptop and WiFi.
- You’ll have to heavily rely on others — If you like to have your hands in every detail of your business, then long-distance real estate investing might be difficult for you. The only way to build a long-distance investing business is to rely almost entirely on market experts, contractors, freelancers, and a property management company to manage your business for you. You’ll still be coordinating a lot of things, to be sure, but you won’t have your boots on the ground. Still, most entrepreneur micro-managing tendencies can be mitigated by vetting and hiring trustworthy people.
- You’ll need to do more market research — Since you’ll be operating in a market that you probably know very little about right now, you’re going to have to do more research than you would for your local real estate market. You’ll have to call other investors and agents in the area to pick their brain and find pertinent statistics to ensure the market is a good place for your real estate investing business.
Now that you know the main pros and cons of building a long-distance real estate investing business, let’s jump into the high-level steps.
Step #1: Choose a Market
The problem with choosing a market for your long-distance real estate investing business is… there are tens of thousands of real estate markets in the U.S.! Each one has its own culture, housing metrics, good and bad neighborhoods, school systems, and attractions.
Your job is to learn as much about a market as you can before putting any money into it.
But how do you get rid of the shell shock of just how many options you have?
Here are some things you’ll want to look at when choosing a market.
Even if a market is very profitable for investors, it’s also important to consider how many investors are already fighting over deals in that area.
This shouldn’t necessarily discourage you from entering the market, but you need to know what you’re getting into.
If you are going into a competitive market, here are a few things to consider…
- Who are the most successful investors in that area?
- Do you think you’re capable of competing with them?
- If you can’t compete with them directly, is there an under-served market or niche that you could take advantage of?
Perhaps the easiest way to determine how much competition is in a specific market is just to Google for “sell my house for cash in [city].”
Then see how many real estate investors are trying to rank their websites for that keyword.
That way, you know what you’re competing against.
For the most part, a fast-growing, thriving population is good for your real estate investing business. That increasing population translates to faster appreciation and more housing demand. If a market is staying stagnant or is declining, then it’s best to steer clear and find a local market (go down to the county or city level) that people can’t seem to resist.
You can find out the population of almost any market with a quick Google Search.
Alternatively, you can search through data on The United States Census Bearau’s website.
Dependent on multiple industries
One way to ensure that your business doesn’t last long is to invest in a one-trick-industry market — that is, a market with only one big company or corporation supporting the employment rate.
That’s a recipe for an impending market crash.
Instead, choose a market with multiple strong industries and/or corporations supporting it. That will make for a much more stable market for your real estate investing business.
To determine what industries support a market, connect with other people in the area (real estate agents are great) and ask them. You can also use Google to do a chunk of your research if necessary. Also, consider looking into the local unemployment rate and comparing that to the nationwide average.
Parents want their kids to go to good schools. And if you invest into a neighborhood that has poor-quality schools with a bad reputation, you’re setting your business up to struggle.
Finding buyers or tenants for the properties that you own will be far more difficult than it needs to be if your properties are in an area with a low-quality school. But how do you check which schools are preferred by the local community?
Well, one of the best ways to find out is to call people in the area and ask them.
Or you can go to GreatSchools.Org and do all the research on your own.
Most people don’t want to live somewhere with high crime rates. Tenants typically will try to leave as quickly as possible and your pool of buyers immediately shrinks. Plus, appreciation won’t be as pretty, either.
So try to invest in an area with a crime rate that isn’t too terribly high.
You can determine a lot about an area’s crime rate with a quick Google Search.
Price/rent ratio is a metric you can use to get a general idea of a market’s profitability.
It won’t tell you everything you need to know about at area, but it can certainly help you understand how profitable a market is for rental properties.
To calculate the price/rent ratio, you just need to take the median property price divided by the median yearly rent. Here’s what the formula looks like…
Price/Rent Ratio = Median Property Price / Median Yearly Rent
So if a market’s median purchase price is $200,000 and its median annual rent is $24,000, that would be a price/rent ratio of 8.3.
The higher the price/rent ratio number, the less profit an investor will receive in that market.
San Fransisco, for example, has a price/rent ratio of 50.11, which means that a $600,000 home only rents for $1,000 per month.
On the other end of the spectrum, Detroit, Michigan has a price/rent ratio of 5.35, which means that a $64,000 home will rent for $1,000 per month.
Having a healthy vacancy rate is an absolute must for the market that you choose. Find a market with a vacancy rate that is similar to the national average or, ideally, a little bit better. The lower the vacancy rate on rentals and for-sale homes, the better for your business.
You can find loads of information over at Moving.com.
Step #2: Build Relationships With Local Real Estate Experts
“I have always believed that personal relationships are vital in business and that people should be directly accountable for their actions.” — Richard Branson
The best part about having a long-distance real estate investing business is that you don’t have to be tied to living in one area. You can work from wherever you want, whenever you want.
But you will still need to enlist the help of local real estate experts, trustworthy contractors, and maybe even a property management company (depending on what kind of investing you’re planning to do).
In regards to that first one, the more local real estate experts that you network with, the more referrals you’ll generate, the more potential for long-term partnerships you’ll have, and the easier it’ll be to navigate market-specific regulations.
You might also consider using a real estate agent’s services to show your houses to potential tenants or buyers, as well, which gives you all the more reason to build meaningful relationships with local experts. You can start by calling other agents and investors in your chosen area of operation, introducing yourself, and telling them what you’re doing. You might be surprised at the opportunities that arise.
Step #3: Find Trustworthy Contractors
Like I mentioned earlier, in order to build and manage a long-distance real estate investing business, you’re going to have to let other people do a lot of the work for you…
This can be a great way to force yourself out of the I-must-do-everything entrepreneurial mindset if you tend to be a micro-manager. It’s also just a great way to build a business that doesn’t require you for every little task.
Still, you’re going to need trustworthy contractors who do what they say they’re going to do, charge a fair price, and can help you out whenever something happens to one of your properties.
Perhaps the best way to find contractors you can trust is to look at online reviews and ask for references from companies before working with them. You can use a website like Angie’s List to find contractors in your area of operation.
Step #4: Vet and Hire a Property Management Company
If you’re going to build a buy-and-hold real estate investing business long distance, then you’re definitely going to need a property management company to give you a hand. If you’re going to strictly wholesale, then you might be able to dodge this step.
In the case that you do need to hire a property management company, expect them to charge between 4% and 10% of your gross monthly income. Some will also be able to help you find tenants for an additional fee.
Property managers can do everything from filing taxes for the property to finding contractors for unexpected work and invoicing tenants. It’s up to you how much control you want them to have, but you’ll most certainly need their help if you’re going to hold any of your inventory. I’d start with a Google search for property management companies in your area of operation and I’d also ask local agents and investors if they have any recommendations.
Step #5: Set Up Clear-Cut Processes
When you’ve built a local real estate investing business, you can make up for a lot of half-assed processes. You can talk to tenants one-on-one, you can drive to the property if you need to, or go to the title company, and you can even try to fix things yourself.
But when you own a long-distance real estate investing company, it’s absolutely critical that your processes are clear-cut and systematic. The better your processes for finding tenants, coordinating with your property management company, and finding contractors, the easier running your business is going to be (which is kind of the goal anyway).
Don’t cut corners, and don’t leave a bad process to fend for itself — it could cost you time and money in the long run, it could even topple your business if you’re not careful.
I like Michael Gerber’s explanation of how to build a business…
“Organize around business functions, not people. Build systems within each business function. Let systems run the business and people run the systems. People come and go but the systems remain constant.”
How To Structure Your Long-Distance Real Estate Investing Business
To a greater degree than many entrepreneurs realize, building a successful business is largely a matter of putting each puzzle piece in the right place and trusting the process.
Most successful real estate investors have very similar business models.
They don’t do anything particularly unique or interesting… they’ve just been doing it longer and more consistently than those that have fallen by the wayside.
They trusted the process.
And that’s a very important part of success.
You’ve got to trust that what other people have done to become successful will also work for you… and you’ve got to give it enough time to work its magic.
In fact, here’s the basic business format that successful real estate investors follow…
Direct Mail, Ads, and SEO ⇨ Sales Rep
The three main ways that wholesalers find deals is through direct mail, paid ads (Facebook and Google, mostly), and search engine optimization (ranking in Google for pertinent keyword phrases).
(Check out Ballpoint Marketing if you want to get more deals from your mailers)
There are some other common strategies, of course, like cold calling, driving for dollars, and even door-knocking… but those are the big three.
And if you use those three tactics consistently, then you’re going to generate leads.
When the phone starts ringing, a sales rep — NOT YOU — should be answering the phone.
In fact, this is probably one of the first positions you should hire as your business grows, that way you can focus on more important tasks.
But if you’d rather not worry about hiring and training your own sales rep, at Call Porter, our expertly trained, U.S.-based reps can answer the phone for you and schedule a follow-up call with you or your Acquisitions Manager.
Check out our free demo to learn more.
Sales Rep ⇨ Acquisitions Manager
When your sales rep — or our sales reps! — answers the phone, they should just have a few goals.
First, they should try to get pertinent information about the property — how much the seller is hoping to get, address, condition, etc.
Once they’ve answered some inevitable seller questions and collected property information, the only other goal should be to schedule a follow-up call with your Acquisitions Manager.
This is the person who manages the entire deal-finding process.
They should manage your marketing, house visits, offers, seller relationships, due diligence, and follow-up.
You must have a high-quality person that you can absolutely trust in this position. Ryan Dossey, the founder of Call Porter and owner of his own 7-figure investing business attributes much of his success to his amazing Acquisitions Manager.
They will help run bun your business while you’re away… which is important if you want to build a business that gives you freedom.
Acquisitions Manager ⇨ CEO
While your Acquisitions Manager will manage everything that falls under the scope of finding and closing deals, your CEO is someone who’s only job is to make sure your business keeps running without your help.
They are someone with the authority to make important high-level business decisions. They help the Acqusitions Manager with cleaning up internal processes and ensuring that deals keep flowing and buyer relationships remain healthy.
You probably don’t want to hire a CEO for your business until you reach 7 figures or more… because finding and hiring a CEO-quality person will likely cost you $100,000 or more per year in salary.
After all, if they’re going to run your business for you, then you want to pay them well.
What Positions to Hire For Your Long-Distance Real Estate Investing Business
You can’t do it alone.
There’s no way around it; if you want to build a thriving real estate investing business where you don’t have to work 15-hour days…
(bye-bye entrepreneurial freedom)
…then you’ll have to hire A-players to help you out. Your business will be more fun with others aboard, anyways. By hiring people, you’ll be able to finally enjoy the fruits of your labor (time with family, vacations traveling around the world, and new hobbies you’ve always wanted to pursue).
But, of course, hiring the right people at the right time and paying them what they deserve is easier said than done. If you’ve ever made a bad hire, then you already know that.
So I put together the 6 basic positions you’ll want to hire for in your real estate investing business, what order you should hire them, and how much you should pay them. I hope it helps!
Note: Every business is different. And while I did my best to compile the high-level picture for who you should hire, when you should hire them, and how much you should pay them, stay flexible. Your business will likely take a slightly different path than what’s outlined below. But now at least you’ll have a general idea of what’s ahead for your business. 🙂
1st Hire: Personal Assistant, $16/Hour
The beauty of a personal assistant is that they can help you do a lot of different things. That’s why they’re one of the first positions you should consider adding to your business.
A personal assistant can manage your email and your calendar, help with due diligence and even take phone calls. As your business expands, you’ll want to take some of those duties off his or her shoulders to leave room for more urgent tasks. But to start, a personal assistant will give you the freedom to focus on business-growth tasks that you otherwise wouldn’t have the time for.
2nd Hire: Accountant, $100/Hour
If you absolutely hate bookkeeping, paying taxes, and managing receipts (like I do), then hiring an accountant should be one of your first priorities. To get a good accountant, you’ll want to budget at least $100 per hour and maybe up to $300 per hour. The good news is that most accountants don’t need to spend a ton of time on your business to get everything ready for tax season (especially if you keep your business expenses organized).
Once you hire an accountant, you’ll be glad you did — you won’t have to worry about getting documents ready for upcoming taxes or payroll. You can just focus on growing your business.
3rd Hire: Sales Representative, $14/Hour + 10% Commission
As your business expands, you’ll become increasingly busy finding and closing deals, marketing, branding, and training — all important tasks for growing your business. And at the point where it becomes too much, consider hiring a sales representative to lighten the load. If you hire someone who’s actually a good salesperson, then you’ll be glad you did. And $14 per hour with 10% commission on profit should be able to secure a talented salesperson who can answer the phone when you’re busy working on other critical business-growth to-dos.
Heck! You might even be surprised at how many more deals you close because one person is dedicated to answering the phone when it rings, without distraction.
4th Hire: Answering Service, $1/Call
Eventually, you’ll be receiving so many phone calls that one sales representative and a personal assistant won’t cut it. You’ll need to hire more people… or you can sign up for an answering service like Call Porter that can screen and schedule your inbound calls and will even scale with your business. Our expert-trained, U.S.-based reps will answer the phone for you, screen the prospect and record pertinent details, and then schedule a call on your own business calendar.
You could, of course, just go hire a remarkably cheap answering service to do that for you (as low a $0.05 per call) but they aren’t going to know anything about real estate or about how your business functions. And they definitely won’t know anything about your prospects and what they’re going through.
At Call Porter, we pride ourselves on the quality service we offer our members — you can apply for a free demo over here.
5th Hire: Acquisitions Manager, $18/Hour
Up til’ now, you will have been running the acquisitions side of your business. You might be getting some help from your personal assistant, but you’ll still have your hand in due diligence, direct mailings, market research, and determining cash offers.
An Acquisitions Manager is just what it sounds like — you hire someone to take over everything that has to do with acquiring new properties. That way, you can work increasingly on your business rather than inside your business. Our Call Porter service can schedule the follow-up with your Acquisitions Manager if you already have one (this is what many of our members have us do).
And we have an entire article dedicated to helping you find the perfect person for the job. Check it out.
6th Hire: CEO, $100,000 Salary
When you set out to build a thriving real estate investing business, you didn’t dream of working 15 hour days and never seeing your family. You dreamt of freedom. Financial freedom and time freedom.
That’s where hiring a CEO comes into the picture. Once the systems are in place for your business to run like a machine and once you’re almost entirely out of the daily workings of things, only working on polishing processes and inspiring workers, you know it’s time to hire a CEO.
This person will take over the rest of what you’re doing. They will work on the business rather than inside the business — you might even consider giving them shares in the company — and you can sit back and relax while someone else works to grow what you started.
Step #6: Avoid These 5 Long-Distance Real Estate Investing Blunders
Owning a long-distance real estate investing business is awesome.
It allows you to live wherever you want, invest in the best markets around the nation, and it requires you to create systems and processes that take you out of the day-to-day management of your properties (which is good!).
But as Ryan Dossey said in his below video, “If you go into this industry with rose-colored glasses, pardon my french but you’re gonna get your ass kicked.”
While out-of-state investing is awesome, it also requires a bit more due diligence than your last local flip.
You can watch the video below or read through the article to learn about 5 mistakes that out-of-state investors need to be careful of!
1. Not Having Boots On The Ground Before Buying
We don’t want you to be paranoid… but be careful who you trust, especially when you’re buying a home out-of-state. Remember that there are sketchy realtors and wholesalers out there (people who are just trying to make a quick buck) and they’ll happily screw you over if you let them.
Before you buy a property, we recommend getting boots on the ground. Find someone you trust to go look at the property (someone who has no relation to the agent or investor you’re buying from) and send you pictures of what they find. This should be a part of every single home you buy out of state.
2. Not Checking On Properties Often Enough
Once upon a time, Ryan Dossey was going to buy a property that ended up not existing. On the way to see the property, they discovered that the home had caught on fire and the city had bulldozed it. The owner had no idea.
Check on your properties at least every three months. Pay someone to do a drive-by for you or, if you want to be more thorough, then notify the tenants and have them check the inside and outside of the house.
3. Not Getting Full Inspections
This is where you really don’t want to have rose-colored glasses. It’s easy to get distracted by the money you could make from a deal, rush the process, and neglect getting a full inspection of the property.
A proper process includes having the property inspected by a professional — and it’s in your best interest to trust that process… not the sellers, wholesalers, or agents who PROMISE there’s nothing wrong with the property.
4. Paying Too Much
Your home here doesn’t not equal that home there.
What I mean is, when you’re buying a home in an area that you’re unfamiliar with, do not make assumptions. Something might seem like a good deal when you compare the prices to your own market, but be a terrible deal in the market where the home is located.
Don’t compare apples to oranges. And get a full appraisal if you have to. It’s better to pay for an appraisal and find out that the deal is a bad one than it is to pay double or triple the real value of the property (we’ve seen it happen before).
5. Not Working With Trustworthy Contractors
As an out-of-state investor, you don’t have to just do due diligence on the property, but on the people who you’re working with. Before you trust anyone to inspect, appraise, or make repairs on the home… check reviews, talk to past clients if possible, and speak with the people on the phone.
If you’re getting a weird vibe, find someone else. And if you’re struggling to find someone you can trust, then just hire a professional.
3 Ways That Call Porter Can Help You Grow Your Long-Distance Real Estate Investing Business
At Call Porter, we are already making a big difference in hundreds of investors businesses around the nation. We’ve trained our sales reps to speak intelligently with motivated sellers so that you can focus on more important tasks…
…and they’re doing a killer job.
We answer 99.93% of all calls live (they don’t go to voice mail) and the average call is picked up in less than 12 seconds.
And we can start answering the phone for you within just 48 hours.
Here’s why we think we’re a great fit 😉
1. Make Your Business More Scalable
Trying to grow a business that isn’t easily scalable is like drag racing in a smart car… you ain’t gonna get anywhere fast.
So what makes a real estate investing business difficult to scale?
Mostly, not having clean and clear internal processes that drive deals from start to finish. For your business to be capable of providing you with the finances and freedom that you desire, you need other people to analyze markets, send out mail, answer the phone, and even follow up with buyers and sellers.
For our members, Call Porter is an important part of that process.
We can answer the phone when leads call and pass them onto your Acqusitions Manager so that you spend less time in the trenches… and more time growing your business, which brings us to the next point.
2. Give You Time To Work On Momentum-Building Tasks
Most new entrepreneurs get so excited about building their business that they unintentionally become an integral part of their business.
Then they look back, frustrated, wishing they would have worked themselves out of the processes they created.
After all, the entrepreneurial dream isn’t to work all the time… but to enjoy self-made freedom and finances.
I love this quote from Michael Gerber: “If your business depends on you, you don’t own a business — you have a job. And it’s the worst job in the world because you’re working for a lunatic.”
And if you’re like most investors, you spend way too much time on the phone, talking with motivated sellers and tire-kickers alike.
But with Call Porter, you can feel sure that your leads are being taken care of… and you can have plenty of time to work on momentum-building tasks for your business, like hiring the right people and building out the right processes.
And if you have an Acquisitions Manager with who we can schedule follow-up calls after we vet your leads, then you’ll really be cookin’!
3. Close More Deals With The Same Amount Of Leads
Want to know a really simple sales secret that can help you close up to twice as many deals with the same number of leads?
Pick up the phone when it rings.
50% of sales go to the first salesperson to contact the prospect and you’re 9 times more likely to convert someone if you follow-up within five minutes.
That makes sense, right?
People are in a hurry and they aren’t afraid to call someone else (your competitor) if you don’t answer the phone.
Still, that’s easier said than done… especially if you actually want to have a life.
Dinner with your family, date night with your spouse, and beers with friends can regretfully turn into long sales calls if you’re not careful.
That’s why we want to answer the phone for you…
So can close more deals with less work.
This isn’t rocket science, but it is science.
And if you’re up for it, we’d like to offer you a free demo of our service so you can check it out for free. Click here to learn more.
You’re going to crush it. 🙂
And we’re excited to help!
Is a Long-Distance Real Estate Investing Business Right For You?
I can’t say one way or the other.
But I do hope that this article has helped you answer that question.
You now know the pros and cons of building a long-distance real estate investing business.
You also know the high-level steps to build one. The only thing left to determine is… is a long-distance real estate investing business right for you? Or would you be better off building a local business?
The choice is yours.
I’ll just say this: there’s almost just as much potential in building a long-distance real estate investing business (if you do it right) and there is certainly far more freedom.
What do you think? What has experience taught you?
Is a local real estate business the way to go? Or can long-distance real estate investing be just as lucrative and fulfilling?
Let me know in the comments!