The Secret behind Managing Property from Afar
In the past 6 years of being a property investor, I have moved over 6 times (thanks mainly to the delights of having a partner in the armed forces!) and the closest I have ever lived to my main investment area was 200 miles away.
You would think that this constant change would make it impossible to successfully invest in property and make a good passive income from it…think again!
When I started learning to invest back in 2014, I had no experience, no money and no idea where I wanted to live or buy investment houses.
Now 6 years on, I own a portfolio valued at over £1.7 million of Buy-to-Lets and HMOs (Houses of Multiple Occupancy) as well as a couple of land development sites on top.
I know…How on earth did that happen amidst all of those house moves?!
Well, here are my top tips which I have learned about successfully finding and managing property investments whilst being 100s (if not 1000s) of miles away.
1. Focus on the Numbers
At the end of the day, everyone is in property to make money…whether that is as a cash lump sum from flipping, a passive income from renting or capital growth from buying and holding.
That means that you need to choose your investment area based on the numbers which matter to you, not on where you physically are in the country.
For example, if like me, you want to invest for great rental returns and earn an income from property, you are usually best looking up in the North of England or in South Wales. In those areas, house prices are relatively low compared to rental prices.
And there is even more to consider than that…where could you add value to properties and stretch your funds as far as possible?
In some areas, the price of a run-down property in need of refurbishment is much lower than a property in good condition, even if they are exactly the same size and style.
However, in other areas, there really isn’t much of a gap in prices between properties which need work and those which are completely “done up” and ready to live in/rent out.
Look for an area where you can add value and make your money work as hard as possible for you…
Unfortunately, if you live in the South…this will probably mean you have to commit to quite a long drive to your investment area at least once/month for the first couple of years, but if you find an area where the numbers are amazing it will be worth it, I promise!
2. Stick to ONE area
This is true whether you intend to move about and live miles away from your investment area or if you intend to live inside your investment area forever.
You need to get to know your investment area really, really well…I mean knowing which streets are “good” (i.e. have a high rental demand) and which streets are “bad” (i.e. have a reputation for whatever reason meaning that people don’t really want to live there).
Another part of getting to know your investment area is knowing what plans there are in store for the future.
For example, is the council planning a big regeneration project? Or, on a less positive note if you are looking to buy there, are they about to impose a compulsory possession order on a few specific streets (where the council forcibly buys property off you at a set rate in order to completely re-vamp that area).
What about any large industries moving to the area and building large factories or retail parks which could be huge employment providers, driving the rental demand in the area up.
And not forgetting plans to improve road or rail links to major cities nearby which could all improve the rental appeal of your investment town.
It is obviously easiest to get to know this level of information if you happen to want to invest in your “home” location where you have grown up and already have a feel for what’s going on.
However, it is even more important if you don’t live near your area so that you can assess potential properties quickly from a laptop or phone miles away.
Imagine if you start investing in 5 or 10 different locations across the country…how will you ever get to know each location well enough to understand the complexities and nuances of that specific town?!
There’s nothing wrong with investing in different areas, it is just going to make your life a lot more difficult.
Especially, when we start to consider getting to know key people in your investment area…
3. Build a Local Team
If you are going to be miles and miles away, you will need to make sure you have a few great people in your investment area to take care of the day-to-day running of your portfolio.
A crucial part of this team is a good letting agent.
Not just any letting agent…you need one who is on top of things and will be able to be your eyes and ears when you aren’t there.
If you aren’t sure how to assess any potential letting agents and weed out the good ones, check out my blog on How to Find a Good Letting Agent.
There are a couple of other key people to add to your local team as well; a great builder and a surveyor.
You want to find a builder who can effectively project manage a refurbishment without you constantly peering over their shoulder.
However, you might not want to use an official “project manager” who will charge you a hefty fee to oversee a relatively minor refurbishment.
The best builders are usually somewhere in the middle…they might have trained as a carpenter but are able to pull in other trades as and when required, so that they manage the whole project.
All whilst sticking to budget and schedule.
Ok, sometimes that is a bit much to ask…personally, I always allow a lot of extra contingency in terms of schedule, so long as my builder sticks to budget!
So, where do you find these fantastic builders?! Recommendations.
Ask friends, family and local Facebook groups for recommendations. Or, even better, ask your new found best friend…the letting agent!
Wherever you hear of a builder from, you still need to validate them by checking previous work and I would also highly recommend getting a JCT in place (see my Top 5 Mistakes blog to understand why!!).
It can be difficult sometimes to find a great surveyor, but again recommendations are really useful.
Try to find a surveyor who can provide a homebuyers report with a valuation and some pictures to illustrate any issues.
You are unlikely to need a full-blown structural survey unless there are large cracks or other significant issues…and if there are, you probably want to get a specialised tradesman in anyway to confirm the problem and works that need doing.
Now, the best part about having this local team in place, is how they can work together for you…
4. Create Systems
The absolute key to successful management of a property portfolio from afar, is having systems in place.
Your portfolio needs to run with little or no input from you in order to allow you the freedom to travel unrestrained. A lot of the day-to-day systems will be mainly between you and your Letting Agent...
But, if you want to continue growing your portfolio whilst on the move (which I would highly recommend!), then you will need even more systems in place!
For example, if you are too far away to go and view a property when it first pops up on the market, you might well miss out on that purchase if the market is moving quickly.
So…could you send your builder along to view the property for you?
I always send my builder in to view and quote for works before I actually proceed to complete on a property purchase.
So, considering I know my investment area very well, it makes relatively little difference whether or not I have actually been in the property as well.
I already know the potential values in the area (and I double check them with agents as well), so I can base my offer on my builder’s refurbishment quote.
I also send my surveyor in to provide a homebuyers survey on the property, which gives me another validation check on what the builder has said needs doing in the property.
And then, when a property purchase does complete…guess who goes to pick up my keys for me? That’s right, my trusty builder!
My builder then does the refurbishment they have quoted for and when it’s all finished, he hands the keys over to my letting agent.
Now the best part is that my letting agent knows the standards I need the work to be completed to, so when they go to visit the property to get it on the market, they also simultaneously check my builder’s work for me.
My local team are invaluable because they all work together in systemised ways, making sure that pretty much the only job I am left with is to find the properties in the first place!
So there you have it…it is perfectly possible to build and grow a successful property investment portfolio wherever you are! If you have any questions or want to know more insider tips for how to get the most out of property investment, join Nala Coaching’s VIP email list here!