I have a job that I plan to keep. My wife works as well. I want to get a Florida license while still living in OK (Florida is reciprocal, i believe to Oklahoma, but our focus will be investing in FL). The license will primarily serve to help me as an investor, i.e. generating/saving money in commissions, and early MLS access.
After getting the certification, passing the test, and getting my license the plan is:
Get broker to work under (suggestions on broker, commission, everything appreciated)
Find Property Management Company(a good idea to work under broker whose office also has prop management??? Percent to pay???)
Start buying single family homes in Panhandle (Panama city, Pensacola) in the 60-100k range to rent (pensacola especially has many 2bd/1ba cottages that have catered to military mebers. My wife and I are both 750+ credit scores, so i’m thinking on a 100k house: 5k down, 3k to get it ready, less my 2k commission (after brokers cut) means we need 6k cash for each deal.
These are the tentative plans. My mom has been a realtor forever. She says I’m crazy to do this because:
It’s difficult to build a team you wont live around.
It’s difficult to buy property you wont physically see.
The costs associated with getting license (prob 1k a year in FLorida?) make this a bad way to go.
Does the Pentagon’s Base Realignment and Closure plan for the next five years affect Pensacola? If so, then your rental market may all move away.
As far as being a long distance investor is concerned, I have had good succcess. I have a real estate agent, and a property management company on my out of state team. I have been doing business with these folks for over ten years now, so I trust them. They know what I want in a property and are not afraid to tell me when a proposed acquisition is not a good fit with my portfolio.
I have even bought, rehabbed, rented, and sold property I have never seen, because I have that much trust in the team I work with. Being a long distance investor is not that hard – Putting together the right team is the hard part.
I don’t know if the re-alignment plan would affect Pensacola. I will look into that.
Your post brought up a great point, though in as much as you don’t have a license and are leading an out of state team in your investment market. I am curious:
Do you feel an advantage or disadvantage to not being licensed? ie the 3 percent you give up on each deal vs. the ease with which deals are completed?
What is the process you might recommend in building an out of state team?
My thoughts (if i were to go the “no license, just operate as investor route” would be:
a. Get a Panhandle agent (prob have My mom refer me)
b. Negotiate a commission fee (as I’ll be more active than most clients)
c. Get prop rental company (good to get same company agent is in or not??)
d. Have financing, but may pay to talk to agents person?
e. Get involved in local discussion, internet group down there.
1. Do you feel an advantage or disadvantage to not being licensed? ie the 3 percent you give up on each deal vs. the ease with which deals are completed?
Since I have never been licensed, I am not sure why MLS access is that important to a rental property owner. I can ask my friendly real estate agent to pull comps on a property I might want to purchase. When I am ready to sell, I can ask my friendly professional property manager who is also an agent to represent me for a reduced commission. Since I don’t visit my out of state property that much, since I don’t buy AND sell that much, I don’t feel disadvantaged by not having a license. After all, I am not making my money from commissions.
Giving up 3% has never bothered me either, since the seller is paying the commission. If you buy to hold long term, then you potentially might never sell. If not getting a 3% commission on the buy will break a deal, you are in the wrong deal to begin with. Not sure where you are coming from with “the ease with which deals are completed”. Deals are completed based upon mutual acceptance of terms and conditions of sale. Whether I am licensed or not, does not affect the “ease” with which that mutual acceptance is reached.
If you are going to be in the rental property game, learn that you are not buying a property to rent, you are buying a cash flow – both the monthly income and a large lump sum at the end if and when the property is sold. When you reorient your thinking away from commissions and toward cash flow, you will wonder why you ever thought you needed a license.
2. What is the process you might recommend in building an out of state team?
Follow the same process you would follow in building a local team. This means you will have to visit the area, meet and interview candidates, work a few deals and make adjustments as you go.