Announcer: You’re listening to Real Estate Investing Talks, a SimplyDoIt podcast. Your journey to success in real estate investment starts right here, right now. Here’s Dani Beit-Or.
Dani Beit-Or: Good morning/good evening/good afternoon, depending on where you are. My name is Dani Beit-Or. This is an open to the public session, so we have usually people who speak in multiple languages. I see a lot of people who speak actually Hebrew, so that’s nice, but we’re going to hold this session in English because it’s open to the public.
My name is Dani Beit-Or. I am based in Southern California, and we’re going to talk about obviously real estate investing, no doubt about that. We do this session every Friday 11:00 a.m. pacific time. The purpose for this session is primarily to have your questions come in before or during, so feel free to drop in questions as I speak.
We’re recording this session. It’s a Facebook live session. If you’re watching this on a recording, not live, later on, feel free to add your comments or questions later, and we’ll try to address them as well. We’ve been doing it for about two months, maybe three months, by now, and it’s probably three months.
I discovered that when I go out and actually meet people in person and not just virtually, a lot of people tell me, “Oh, I watched you online. I saw you online. I see your sessions.”
I was speaking in Sunnyvale, California two nights ago, and someone came in the room and said, “I’ve been watching all your Facebook lives and listening to your podcast,” so that’s always great. Thank you for that.
The topic for today- and feel free to drop in or post your questions of course- something that usually comes up quite a lot when I talk to the investors is should you travel to see your investment?
Remember, we are talking about investing remotely. Most of the investors we work with live in one area and invest in a totally different region to say the least. When I say region, I mean thousands of miles away from the house, sometimes many thousands of miles away from where they live, and the topic of “should I travel out there” comes up many, many times.
I want to give you an answer based on my experience and what I see, what people usually do. It’s actually not a clear cut yes or no. I think the basics of this question is “should you travel?” I think the answer would be yes. It’s probably better.
I still travel out there to check on teams and properties and so on. Every time that I go, and I’ve been traveling to markets for probably 14, maybe more than 14, years now, every so often. I’m actually heading to Nashville, Indianapolis, and Chicago in two weeks. One very packed week of traveling.
I think the simple answer is yes, but then if you want to dive into it, I think you should look at it in a few different ways. First of all, I have learned, I always tell my investors that I work with when they ask me this question, I tell them, “Listen, if you can, go.”
I think it will be better for you. It will build your confidence. It will help you make sure you do the right thing. You may end up finding out that this is not the right market for you, so even if you go there and decide not to invest there, that’s maybe a good decision to have.
You’re not going to learn a real estate market in a one day travel or two or even a week. It’s not going to happen. Some people say, “What’s the point? I’m not going to know the market anyway in a day or two.”
That’s right. You’re not. But when you go out there, a couple things happen. One is you get to meet the people you are working with, the agent, the property manager, maybe some other relevant people.
Thank you, Yvonne, for the question. I will address it in a minute or two. Thank you. You’ll get to see the people. Second, you’ll see possible houses or actual houses that you are considering buying or purchase. It will definitely give you a little bit more comfort or confidence in what you’re buying from, where you’re buying, if it fits your expectations.
You should not go out there with a clear expectation, “I want to see a neighborhood and measure it as if I would live in that area.” That is not usually a good way to go about it. Many of the investors that we work with have a little bit of a higher end lifestyle and are investing not in bad areas at all, but not necessarily in an area they would want to live or house they would want to live because they would be too small or not fitting their own lifestyle.
Don’t go in and measure any investment by that. Just measure it based on your expectations on what you want to see over there.
Going out there, spending the day, getting to know the market a little bit. Getting to know the teams is very important. Getting to know the areas, the neighborhood really, really will help boost your confidence, plus it will always make you a better investor, at least from my experience still.
Basically, I think it’s a good way to go about it and fly out, especially when you are a beginner. When you’re a beginner and you bought a property and you close on it a month later and then it takes another three weeks to get it ready and another month and a half before it gets rented, remember, by the time you’ve made an offer, by the time it’s actually getting a renter, maybe four months, maybe even five or maybe three have gone by.
If you didn’t see the area and the market, now that the house is out there listed for three weeks now and there are no renters coming in, or it has not been leased just yet, it’s just waiting for a lease and you’re getting nervous, if you went out there and you saw the area, you would be a little bit more relaxed.
If you didn’t go out there and it’s not going well or maybe taking a little bit longer to lease the property, even just three weeks or four weeks, you’re getting nervous. Not only that you’re getting nervous, your friends are starting to bicker to you and say, “Oh, we told you it’s not going to happen,” and you’re starting to doubt yourself. Just to offset those confidence level, it’s very good to go and visit.
You know what? If not on every property, maybe on the first one. I think every one, every property that you buy, but maybe on the first one.
Now, let me tell you what really happens. This is usually my answer when I get asked this question. Now, I want to tell you what I usually see in real life. In my world of real estate which is the SimplyDoIt network which we operate in multiple markets, multiple teams, multiple investors, 85 percent of our investors do not fly out there. They are buying completely sight unseen.
Although they hear my answer that you should go out there, they’re buying sight unseen. We know that if 85 percent of our clientele is buying sight unseen, we need to compensate in our world to try and mitigate that fact.
We ask or we demand or I demand more from the teams that we work with to step up their game on so many levels, reporting communication information to offset that lack of traveling which actually means lack of confidence or not as much confidence level as if you see the house with your own eyes. That’s how we try to make up for that aspect.
We know that most investors do not fly out because a lot of my investors I work with, they’re very busy between jobs and lifestyle and family, and they tell me, “If this would wait until I have to go out there, it’s never going to happen.” We understand that, and we tried to address that or cater to that and incorporate that.
Every once in a while, I see investors that are starting the process of investing with us, and months go by before they make their first offer. If you are someone who is very concerned or very held back, you are probably the one person who must go out there because if you’re seeing that you’re not even making offers–
I’m not talking about if you made multiple offers and nothing’s stuck so far. That’s fine. But if you’re kind of sitting on the sidelines debating, debating, debating, debating, thinking, not thinking no, and not pulling the trigger or even submitting an offer, something is holding you back. Most likely it’s fear.
One very important way to overcome that fear is to go out there. That will not close the gap of fear. It will not completely shut it down, but it will help minimize that gap. It will make you a little bit more confident about buying in that area with those people, and it will help you make the next level, next step.
If you are kind of concerned about this and held back, you’re probably the one person who wants to definitely consider going out there.
Now, what I also see is, I told you, 85 percent of our investors, they buy sight unseen. That means 15 do go out there. Here’s what I usually see for those who do fly. About half of those people, they fly out there before. They go out to the market. They meet with a team. They spend a day before they even submit an offer on the house they want to build. They want more of to build that confidence.
Build that confidence, and then execute and make an offer. They may not end up seeing the house they’re buying, or maybe they will, or maybe they won’t, but at least they kind of say, “Okay, we know the area a little bit better. We feel a little bit more comfortable. Okay. We can make offers. Now, we can continue working making sight unseen offers, or maybe we’ll go there still.” That’s about half of them.
The other half, what they do is, those that have a little bit more flexible timeline, they make offer first. Once it gets accepted, they’re trying to schedule their trip to go out there within a few days to meet the inspector when the house is going through inspection.
Those are the people who know they’ll pay a little bit more for the airfare, and they have the time flexibility to make a decision within a matter of a day or two or three. That means if we made an offer yesterday, Thursday, got accepted today, Friday, and the inspection is on Tuesday or Wednesday, they’re going to schedule a flight to come out there and be there Tuesday or Wednesday on a short notice. That’s how they go about it.
I do have a small group of investors that are traveling anyway. When they’re in the area so to speak, they may stop by a house or schedule their trip in a way that they can go and visit that area or that market even if it’s not exactly on their journey. They’ll make that detour, flying detour or just even a car ride detour in order to accommodate that visit to the property.
If I want to recap this, I think the way you should tackle this question because it seems very obvious that you should. The way you should tackle this is this. if you are lacking the confidence significantly and you are held back from execution for making offers, you probably need to go out there.
If you’re not in that position, I think that working with someone like ourselves to have all the support and infrastructure involved will help you overcome that sight unseen type of a gap because we are trying to compensate for that because we know that’s where it happens.
You can go out there before you even make any offers just to get a feel of the market and the area and the teams, then make a decision if you want to actually invest there, or you can actually say, “Maybe I can make an offer first and accommodate a trip over to your specific house that’s on the contract to meet the inspector or do the inspection while you already have that house,” so that’s very productive obviously. However, it’s always on short notice within three/four/ maybe five days. You have to buy the ticket and go out there, and not everybody can accommodate a trip like that.
That’s my take on that type of a question which seems a very simple question when you think about it, but actually a little bit more detailed when you know how people behave and what you can do, and everybody’s a little bit different.
I’ll just say, every time I fly– and I’ve been doing a flight out there to visit markets and teams for years. I always learn. It’s always gives me focus on that area and not distracted with other things around.
There are things you are fitting visually that you cannot fit over a conversation. You drive to a new area of town and you see the infrastructure that is coming. You see the new schools. All of those things that are changing around. You can’t really get to see them when you’re not there. That’s something that also helps with the fact that you’re flying out there to see the market.
With that said, I see that we have a few questions already coming in, so let’s start tackling them. If you have more questions, please post them. Question number one, what do you think about traveling to see a property that was bought as part of a partnership syndication?
I think it could hurt. Even when you’re doing it as a syndication, when things do not go according to the plan, you are a little bit more informed and knowledgeable about this deal and understand what’s going on if things don’t go according to the plan, and that makes you nervous.
That means, many times in real estate, things don’t go according to the plan. It doesn’t mean it’s a catastrophe, but when you go out there and you see what’s going on, and you feel that confidence, you will be a little bit more not stressed about this deal. Even if things are going according to the plan, it’s good practice anyway.
By the way, I didn’t mention it. When you’re flying out, it’s a fully deductible trip. You can deduct it as an expense. It’s not something that it’s even going to cost you directly out of pocket, so a deductible trip. Something to note.
Next question. Yvonne, you’re awesome that you’re asking all those questions. How do you know if a market is for you or not? Isn’t it just a question of cash flow and appreciation?
There is no formula what’s the right or wrong market. It’s all about what is right or wrong for you. For example, I had a meeting earlier today with someone who, at his age point, he wants to shift more focus to cash flow because he has some life goals that he wants to accomplish.
That means we need to focus with him on building his portfolio or repositioning his portfolio to things that are more cash flow oriented versus someone, say, that doesn’t need the cash flow, not that we don’t want the cash flow, but the cash flow is not the focus, but maybe the appreciation is a little bit his focus.
It’s more about who you are as an investor. There’s no doubt. I don’t need to know you to know that we all want to buy a nice house in a good area with a strong cash flow below market value that will appreciate tremendously. That’s a given. There’s no doubt about that.
But that’s not always achievable. You need to know where you are. Excuse me one second. Sorry about that. You need to know where you are, what you’re looking for. Sorry, I had some distraction here. You need to know what’s you’re standing, what you’re looking for. Are you cash flow oriented?
Are you something else oriented? In order to pick and choose the right market for you or the area or the sub-segment of the market that fits what you’re looking for. That’s very, very important. There’s no clear cut answer. It’s something of compromises and decisions and budget, with a mortgage or without a mortgage. All of those things combined will help you dictate which area or metro or sub-segment of a metro is better for you.
Hopefully that answers. I know it’s a little bit vague, but hopefully that will give you a little bit of direction. You’re asking about when to go before closing, before inspection, after you buy the property. I think I covered that after you asked it anyway, so if you feel it’s still not covered, let me know. I think we touched on that.
What’s the next one? Good questions. If you visit somewhere and you decide it’s not for you, wouldn’t that be a waste of money for a trip? By the way, in my opinion, it would not be a waste of money.
Think about it this way. When you buy a property and you do an inspection, and it comes up from the inspection report the house is in really bad shape. You’re saying, “Oh, $450 wasted.” Is it really wasted? Isn’t it just saving you? It’s a blessing in disguise? That’s my opinion.
I think that if you’re going out there and saying, “You know what? This is not for me,” you actually made a good service to yourself and not wasted– I don’t see it as a waste. I see it as an investment. Remember, it’s deductible, so it’s not even a full waste. That’s just my take on this.
Cash flow and appreciation is something you know before the visit. You mentioned that you need to visit to see if it is still good for you. What does that mean in that sense?
For me, it means that do I really see any bad signs/red flags in the marketplace when I’m there, something that is of a concern to me for one reason or another either within the metro or within the areas or within the people that I’m working with? For me, traveling out there is to feed my confidence.
Now, several months ago, maybe a year ago, less than a year ago, I visited Indianapolis. I met with quite a few people. It does feel like a private lesson. I agree. That’s okay. I like your questions. They’re good questions. Thank you for submitting them.
I went to Indianapolis, and I met with maybe three or four agents and two or three property management companies. I can’t remember exactly, and I could tell very quickly. Here’s an agent. The way he presents himself is very lacking.
His car is a huge mess. I can’t really with excuses. That’s not a good enough of a reason. The way the information is flowing sounds like he’s trying to tell me only the things I want to hear and not what really contradicts himself.
Those things are sometimes hard to pick on, body language over the phone or skype. That was a red flag. Same thing with the property management company. You get a sense of those people.
Some of the houses he took me to, I didn’t really like those houses. I told him what I’m looking for, and he took me to something a little bit different. Then, his answers were very vague, or not vague, but incomplete.
Like, this is the person I want to work with? Absolutely not. He’s giving me, on so many levels, bad vibes, bad answers, poor. There’s a big gap between my expectations and what this guy is delivering.
Right there, it’s something that I could probably pick on that. For my experience, I would have picked on that very quickly by not going there, but just going there makes it a little bit more detailed and intimate and all those things are just more amplified.
By all means, I think that when you go out there, you don’t have to go out there and say, “I’m going to find. I’m going to look for the red flags.” I’m going out there to see that the red flags are not there, to make sure on the people level, on the market level, on the areas, plus I get to learn a little bit more about the area itself closely. I’m more focused. I think it’s a good experience altogether.
I’ve never went on a trip and came back and said, “Oh, this was a waste of time.” On the contrary. Always I tell myself, “I wish I could go even more frequently and visit those areas.”
Yvonne, it feels like this is a private lesson? That’s okay. I see that others do not have questions, so I’m glad you’re putting them. Let’s just wait another minutes or so and see if there are any more questions.
In the meantime, I’m just going to share with you my eBook which is free. [simplydoit.net/ebook] You can download it if you want and maybe have a little bit of a good read on real estate investing in general.
I see some familiar names, so it’s always a pleasure. Quite a few, even family. That’s nice. Hi, Tal. Hi, Mickey. Good to see you guys.
Excellent. Okay. I see that there are no more questions coming in. I think I’m meeting the timeline I have allowed myself, so thank you Yvonne for the questions. Thank you everyone for taking the time.
Let us know if you want our kind of move forward with investing or have something a little bit more specific. We are here exactly to help others to invest in residential rentals and flips in multiple areas around the country out of state or remotely.
With that said, I’m going to just wish everyone a terrific weekend, and I hope to hear and talk to you soon. If not before, then next session should be Friday a week from today. Have a terrific weekend, everyone. Thank you. Bye-bye.
Announcer: Congratulations. You are one step closer to success in real estate investment. You’ve been listening to Real Estate Investing Talks with Dani Beit-Or. To learn how SimplyDoIt can guide you through the real estate investment process and achieve nationwide success, visit us on the web at simplydoit.net. Thanks for listening.