2025 Long-Distance Investing Blueprint (Listen Before Buying)

0:00Henry Washington:We tell you every week on this show that cash flow is possible in 2025. And now we're going to prove it. I'm here with Henry Washington, and we're going to give you our blueprint for long distance investing in affordable cash flowing markets so you can copy exactly what the experts do before buying away from home. So if you're even considering buying outside of your area, this is what to do before you bid.

0:30Henry Washington:Hey, everyone, it's Dave. I'm the head of real estate investing at BiggerPockets, and I'm joined today by my friend, Henry Washington. Henry, thanks for being here. Hey, what's up, bud? Glad to be here. I think it's safe to say, like, you are not officially a long-distance investor yet, right? Yet. I mean, kind of, sort of, but not really. I have a mobile home park that I would truly call out-of-state. I have some properties in other states, but those I don't consider true out-of-state investments because I can be there in 45 minutes to an hour. You haven't done it yet, but we've been talking about it a lot.

1:01Henry Washington:So I know you're interested in it, right? You're interested in it enough to the point where everyone should know this. Henry and I are actually going to be going and driving around the Midwest looking for cash flowing deals, cash flowing markets on the first ever cash flow roadshow. I'm super excited about it. Henry, what are you looking forward to? Well, first of all, I'm a deal junkie. Like I just like looking at deals, whether they're mine or somebody else's, it doesn't matter. And learning about real estate in general. But it's different when you're analyzing deals online than when you're actually in a market and touching and feeling the market and seeing the people who live there and seeing where they work and just kind of how people operate within that market, because it helps you understand better whether a deal truly is a good deal.

1:47But looking at a deal on paper and then going and seeing that deal in person can sometimes be completely different. And so I'm just most excited about learning about these markets firsthand with my own eyes and being within the communities. Absolutely.

2:02Henry Washington:So in this episode, what we're doing here today is we're going to talk to you about, first and foremost, why we chose the Midwest to go on this little road trip that we're going on and the three markets that we're going to be visiting. We're going to talk about logistically, step-by-step, how we're planning for the trip, the number one priorities that you should be thinking about. You want to make these things as efficient as possible, so we're going to talk about that. And we're going to just share with you a couple tips about long-distance investing along the way. But just before we get into that, I just want to invite everyone, if you happen to live in the Great Lakes region, to our free events that we're going to have as part of the Cashflow Roadshow.

2:40Henry Washington:Chicago, it's on July 15th. It's at a brewery. We will put the link in the bio, but you can just go to biggerpockets.com slash roadshow and check that out. And then the next night on July 16th, we're having one in Indianapolis. So definitely come check that out. They are free events. We're going to have lots of giveaways, surprises. It's going to be fun. But you do have to RSVP. So make sure to RSVP if you want to come. We hope to see you there. And with that, let's get into the episode. All right. So let's talk about this trip. We are flying into Wisconsin. So we're starting in the Milwaukee region.

3:12Henry Washington:Then we're going to Chicago. Then we're going to Indianapolis. I'm like the data guy coming out of the list. You picked this. You were like, I want to go to the, what do you call it? The Milwaukee, Chicago, like corridor. Yeah, absolutely. Why? I think it's kind of a unique scenario because you have two major city hubs. And then in between those major city hubs, it's only about a two hour drive. And then there's smaller cities in between these two major cities. And these two major cities are fairly affordable for a major city market in the first place. And then on top of that, you have great rents because there's great jobs in these two major cities.

3:52And you've got these suburbs in between these two major cities where a lot of people are living and commuting to these two major cities. and the larger corporations have started to realize this and have started to come in and build offices to take advantage of some of these workers. And the cities have spent money on infrastructure to help people get in and out of these major cities. And so there's just a lot of economics and infrastructure that make for what could potentially be a good real estate market. On top of that, you have affordability in terms of home pricing and great rents to go with it.

4:32And so in my head, it just seems like this could be a perfect storm for a real estate investor might want to spend their money.

4:38Henry Washington:Are you actually interested in buying here? Like I know you've... Yeah, absolutely. Absolutely. Look, man, I told you, I've said it before. I'll say it again. This perfect storm of data points for real estate investors and a perfect storm in the Great Lakes area creates what? Lake effect cash flow, baby. I love it. Trying to get me some of that. Okay, so that's one area. I think, you know, I've said this before. I think Chicago is like this slept on investor city. I think people have this like vision of what Chicago is. Are there pockets that have no cash flow? Sure. Are there pockets that might have high crime?

5:14Henry Washington:Sure. But like it's an enormous city and there are like really interesting good parts of it. And it's so affordable. Median home price in Chicago is$350 ,000. That's insane. Find me another major city with an economy like Chicago that has price points like that. I mean, the only other major city I can think of that has an economy like Chicago is New York. And it ain't a median home price of$350 ,000. No. I can tell you that. No, it's like triple that, right? Yeah, it's crazy. And so, yeah, I think that there's a lot to go there. And then lastly on our trip, Indianapolis. I mean, this just has like some of the strongest metrics of any city right now.

5:52Henry Washington:It's affordable. The home prices are still like$2,$2.50, but it has huge population growth. Jobs are moving there. There's favorable laws. There's a lot to like there. And I generally just like the Midwest. I'm always hawking the Midwest on this show because I just think affordability is so key to the housing market right now. In an era of low interest rates, it's different. But in an era of higher interest rates, I think, and you see this in the data, the areas where there's still a lot of activity going on are the affordable markets. And if we stay on this path, the trajectory that we're on right now, it seems like affordability is going to continue to be a key driver of performance for investors.

6:31Henry Washington:And so that's just why I like the Great Lakes in particular so much, on top of the cash life. Yeah, no, I agree wholeheartedly. So Henry, talk to me a little bit about what are you looking for? What are your concerns? What are you hoping to learn? First thing I'm looking for is a team in that area, because real estate investing is a team sport. Even here in my own backyard, I have several people that either directly work on my team or indirectly work with me who, frankly, without them, I would be in a world of hurt. And so getting on the ground and starting to meet people who could potentially work with me on my team is huge for me because that team is even going to be more valuable than my current in-market team because I'm not there.

7:18and I don't care what anybody says. It is hard to build professional relationships with people unless you're on the ground with them. Like Zoom meetings only go so far, but when you can get on the ground and meet people and see their work, see how they work in person, I think is huge. And so mostly real estate agents and property managers are gonna be the two big keys. Next in line for me is contractors, but those two things are really important for me to get out there, see, meet, talk to, and see how they work. Because people can tell you how they can work all day. And you can even call and get references.

7:53But when you go and you see how somebody operates their business, it speaks volumes.

7:57Henry Washington:Absolutely. What I usually do is try and look for, I'd say, at least two, probably three agents. Going and interviewing them, for me, that's probably the number one thing. I think that is probably the most important thing you could do. Or do you hold property manager just as high? Well, they're both important. But for me, the agent comes first because the agent's really going to start to help feed you these potential deals, whether they're on the market or off the market. They're your kind of first gateway and they can introduce you to those property managers who are, you know, air quotes, the good ones, because if they're truly good real estate agents, investor friendly agents, they know exactly who the good property managers are and who are not.

8:40So I'd rather take warm intros to property managers from a seasoned real estate investor than to just start calling property managers cold.

8:48Henry Washington:I think the reason the agent's so important is, yes, feed me deals, run a transaction, but their network is extremely important. Extremely important. You want to find an agent who is not going to just execute on your deals, but can connect you to a property manager. I'm always going out and meeting new property managers to help my clients. I'm meeting with contractors because I service a lot of out-of-state investors. Like these are the kinds of things that really matter. You can absolutely find a property manager who can be like your anchor in the community and you can use their network. I've just personally found that agents usually are better for that and take that part of their job very seriously if you're going to be working with investors.

9:33Any good agent will have a database of lenders that they have relationships with. They're going to have property managers. They're going to have contractors, subcontractors. And I said it earlier, warm intros are so much better than reaching out cold. If you reach out to somebody via a warm intro to a trusted professional, people typically answer the phone. They typically answer their messages. They typically prioritize you. And so it really does speed up the process for you.

10:02Henry Washington:All right. All right, well, let's get into the actual questions and things that you should be doing when you interview both an agent, property manager, anyone else you meet along the way. We do have to take a quick break though. We'll be right back. Some listeners may wonder why their insurance quote only took 30 seconds. Some listeners may wonder why their insurance quote took 30 seconds. A better question is, how long will that policy actually hold up when you need it? At NREG, the goal isn't just getting coverage in place. It's making sure your investment property is properly protected when a real claim happens.

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13:41Henry Washington:Welcome back to the BiggerPockets podcast here with Henry Washington talking about our blueprint for out-of-state investing. And specifically today, we're really talking about how to do the final step of out-of-state investing, which is going to a market, building a team, finding the specific neighborhoods that you want to go invest in. That is going to give you the confidence if you want to pursue this kind of strategy to go out and actually do it. We're talking about specific questions to ask. So we've talked about an agent being the most important. So Henry, what are some things that you think our audience, if they're going to do this as well, should be asking agents when they're considering working with them in a long distance market?

14:22So for me, communication is top of my list because if you don't have good communication, then details get missed, deals get lost, things don't get signed at appropriate times, money can be lost. And so you want to make sure first and foremost that you understand how you like to communicate and how you like to be communicated with. And then you want to make sure that your agent is willing to communicate with you in the way that you need to be communicated with. Because if that's a miss on Jump Street, it doesn't matter how good they are with everything else. If you guys aren't going to be able to communicate in a way that's beneficial for you both, then you shouldn't work with that person.

15:04Henry Washington:Dude, I'm having this problem. I have an agent I really like in a market I'm considering investing in, and he just doesn't respond to emails very quickly. And it's kind of like, I get that some people text, but like, I'm in front of a computer all day. I need it in a couple of days. Like, it can't be a week later. And it's like, he might be great on text or phone, and that's fine. But like, as a long distance investor, like, I can't be on the phone all the time. So like, I need it to be asynchronous. So email. That is a perfect example. If you were one of my students, I would tell you first that you need to have a heart to heart conversation with them and let them know truly that this is important to you and how you need to be communicated with.

15:40And if it doesn't work, that's right. And if it doesn't work from that point, then you go, you find another one. Even if they're the best agent in that market, if you guys can't communicate, then you're going to be upset a lot. Things are going to get missed and it's going to end up costing you time or money.

15:53Henry Washington:All right. Communication. That's a really good one. First question I always ask to every agent is like, what's the move? I leave it very open on purpose. I don't say my buy box is a duplex or$450 ,000 because I'm not testing at that point their ability to find me the deal I want. I want to see how well they understand the market. Big picture, like if you were me and you had unlimited time and money, what would you invest in this market? Because it's different in every market, right? Like some it's duplex, some it's single family, some it's commercial, some it's this price point. Show me that you know exactly the best possible investments in your city.

16:31Henry Washington:And so I recommend people do that is just keep it super vague and see if they can convince you of something. And you may still eventually tell them, hey, I have this buy box like this is what I want to buy. That's fine. But at this point in the interview, it's got to be super high level and you're testing them on their market knowledge. Absolutely. When you ask somebody that question, if they're truly going to give you a good answer, it's going to involve them understanding who the customers are in that market, who the tenants are, why they want to rent a certain thing or why they want to buy a certain thing, where they want to rent or where they want to buy it.

17:07That answer should include some information about market data, how long things are taking to sell, what areas of the town things are going fast or going slow in. It shows you that they truly understand multiple facets of their market to be able to come up with a strategy that would make sense for their market. And so you're right. Even if that strategy isn't something you want to do, knowing that they know their market well enough to put together a strategy that might make sense gives you a ton of comfort.

17:35Henry Washington:That's exactly right. I was at a meetup the other day in Seattle, and I don't really know if and what my strategy in this market will be, but I was just talking to an agent and she was like, yeah, if you're going to invest here, my recommendation is like to buy between 900 ,000 and 1.125 million in these five neighborhoods, because what's selling really quickly right now is in that 1.5 to 1.7 million dollar band. And after renovation costs, this is what's going to move for you quickly. I was like, yeah, this person rocks. This person knows exactly how to make money in this market. And like, just gave me a prescription for like, what would work if I were to choose to do that.

18:12Henry Washington:And like, that's the kind of level of specificity and detail that I really think you need. Okay, any other interview questions you have for agents? I have one more, but if you have any more, go for it. I just wanna make sure that these people are actual investors or mostly work with investors because that will help me solidify if it's somebody that I should be working with. Because if you are an investor, there's so many conversations that we don't have to have because you already understand where I'm coming from, right? I don't want to have to educate you on investing while we're working together.

18:48So I don't want to have to waste a lot of time telling you why something's not a great investment, telling you why it's not a great deal, or telling you why I will or will not make a decision that you want me to make about a property because you don't understand it from an investing standpoint. Trust me, you're going to waste a lot of time with people who don't have investing experience. I don't want you to question me every time I need to make an offer at$50 ,000 or$70 ,000 less than what's listed.

19:13Henry Washington:Yeah, right. And that actually leads me to the one I was going to say, which is show me success stories of your clients in the market. And to your point, show me your portfolio. Where are you buying? What are you doing right now? And why? And walk me through the numbers and literally drive me there and show me this market. Like that, to me, you learn so much. Because if they tell you and you're like, hey, this person really thought through where to buy, what to buy it for, how to negotiate this deal, that is going to teach you a lot. I just find like sometimes you drive around a city with these people and they're like, oh, I sold that house or I bought this house or like my client bought that house.

19:54Henry Washington:And you're like, great. Like this person knows every block. You know, like that's the kind of person like you just get it driving around. It's different than them saying I had 40 transactions last year. Or it's like, oh, actually, that's my friend. He's renovating that house. Like when you this will happen if you go with a good agent, this kind of stuff will happen. And it teaches you so much. I've asked agents before what their LLC name is and then gone on the county records and looked up to see how many properties they owned. In most states, you can literally pull up their LLC and it'll show you every property that the LLC owns.

20:28And then you can ask specific questions, especially if they own properties in neighborhoods you're interested in.

20:32Henry Washington:All right. So that's agent. That was a lot of good advice there. What about property managers? Property managers are huge. And I'm actually willing to give everybody a little gift for listening to this show. So if you are listening and you are going to be interviewing property managers, I actually have a list of questions, 25 questions you should ask a potential property manager. And that way you can just go down the list and it even has the answers you're looking for and why on them. So super helpful for me. happy to share that with everybody. What are some of the 25 that you think are better in person, like the ones that you would want to prioritize when you're actually face-to-face with someone?

21:14One of the things I think is important is finding out how frequently they actually go inside of a property and having them verify that with you. And so my property manager is inside of the units quarterly for just random checkups on maintenance items, but it allows them to get into the units four times a year, and then they send me a report of what the units look like, if they were good, not good, and what was happening. If they don't have a clear answer for you about how frequently they're going into a unit, if they're just like, oh, I mean, we rent it out and then we'll check on it if something comes up here or there, that's not okay for me.