Tips for real estate investing while overseas?
Monday, 9. August 2010
My wife and I are taking positions in the middle east for a couple of years. We want to know if coming back to the states every 6 months or so and purchasing some foreclosed/short sale/inexpensive properties in the Metro DC area to rent out while gaining equity for a few years is a good idea. Any problems that we may run into? Things we have to do in order to protect ourselves(Corporation, LLC etc)Certain companies to help manage our properties? I know this is alot but I want some good info!
Thanks
We would want to secure several loans with 5 to 10% down on the homes if possible….maybe 2-4 at a time if we could
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I Buy And Sell Houses Says:
Your overall concept is good, and there are a lot of values in the DC Metro area. (I’m a Realtor licensed in Virginia as well as a real estate investor in Northern Virginia.)
You might want to adjust some of the details of your plan, though. For instance, if you’re coming back to the States every 6 months or so, that’s fine. But don’t come back just to invest in real estate. You can invest while you’re in the Middle East. With the Internet, with digital cameras, with e-mail, and so on, you can do everything from overseas. Give a Realtor the specs for what you’re looking for. As possible opportunities come up, the Realtor will send you the listings. If you see one you’re interested in, you can ask for additional pictures, comps of the property from a sales perspective, and comps of the property from a rental perspective. If you’re then really interested, you can make an offer subject to all the regular contingencies (home inspection, financing, etc.). And you can buy from overseas.
As you probably know, the DC metro area has been notorious for rental income not covering PITI…or coming even close. With prices depressed in certain areas (Manassas, Woodbridge, parts of Reston), it’s actually possible to cash flow some properties today. It’s difficult to say how much longer that’ll last. However, I think you might find more equity appreciation elsewhere–generally closer in, nearer the Beltway.
As for protection, investors like to use LLCs. Check with your accountant; there are some tax advantages to LLCs over Sub-Ss. One other nice form of protection is the use of land trusts. They’re more expensive to set up (several thousand dollars versus maybe $500 for an LLC), but a lot more secure.
You would definitely want a company to manage your rentals. There are some good ones around.
Regarding your hope for 5%-10% down loans, that would be difficult for investment property. Especially if you accumulate several. But you could possibly start off that way. There are other ways to minimize your outlay. One is to lease-purchase or lease-option a property. Another is to do an equity-share with a tenant-buyer.
Hope that helps.