An Unusual Real Estate Investing Scenario
Christy's uncle lives in Wyoming and owns some commercial real estate property. He's advised her about a property in Wyoming for $114,000. Should they buy it?
QUESTION: Christy in Los Angeles and her husband own a home and also have a rental. They are interested in getting into some purposeful real estate investing. Her uncle lives in Wyoming and owns some commercial real estate property. He’s advised her about a property in Wyoming for $114,000. Should they buy it? Dave isn’t completely against it but tells her to know she’s going to have some extra potential for heartache.
ANSWER: I don’t disagree with you that California real estate can be prohibitively expensive. My normal answer is don’t do long-distance landlording. It’ll get you in trouble. When you can’t get to where you can touch the property pretty quickly, you can get yourself in trouble. I’ve owned property all over the place, and I always think about having a property in another city and some guy’s changing his Harley oil in my living room. There’s just no way you can keep your fingers on the pulse of what’s going on. Yeah, you’ve got an uncle there. That helps, and yes, this is a relatively inexpensive piece of real estate that you’re laying out. That helps. Paying cash for it also helps considerably. What that gives you is some margin for screw-up, really, because you’re going to have more likelihood of screwing up because you’re not there. That’s my biggest objection to it.
I don’t buy real estate except in my own backyard with extremely rare exception. Usually, it would be something for my own personal use if it wasn’t in my own backyard. I’ve got a condo in another city, but nobody lives in it but us when we go there. That kind of thing. You throw up an interesting part of the discussion. I live in Nashville, so I cheat. I’ve got that $115,000 triplex down the road I can look at. You don’t have that option in L.A.
I’m not completely fried up against it. You’ve just got to know that you’re going to spend some airline tickets, and you’re going to have some extra measure of potential for heartache. It’s not all going to be a bed of roses. You have family there, so if you needed to send somebody over to knock on the door or drive by it once every couple of weeks to make sure they haven’t got three cars with the wheels off in the front yard, you can. You just need to ever so often go by and look at the place yourself. You’re going to do that a couple of times a year. You’ve got some cousins or uncles that’ll do that who will help you with the management. You’re not trying to be the chick from L.A. trying to find the plumber in Wyoming to put in a water heater who gets ripped off. I’m kidding around, but not much. You could get home cooking on the plumbing bill. That kind of thing is what you run into—guy or gal, California or Tennessee. It’s harder. As long as you go in knowing that you’re going to have to do some extra things to offset the fact that you’re actually getting some affordable real estate investments, then I’m okay with it. But I just want that big warning around it. If you were in Austin, Texas, I’d just tell you not to do it because you have options right there in your backyard.
I’m with you, but hear that warning real clearly, and that way you don’t get burned. Sometimes, you can go in and put the shields up and keep you from getting problems later.