Tip #1 Develop an Interviewing System. If you are going to select a great investment partner, you should take the time to develop a formal screening process. This process doesn't have to be too complicated. Actually, it can be as simple as having a written set of questions that you ask of anyone who you are considering a potential partnership with. This can be done via Skype, instant message, phone, email or a combination of these. You're trying to learn as much as you can about your potential partner. Your system should hopefully allow you to make informed determinations about about their: character, background, level of expertise, etc. The format of the interview/s and types of questions will vary based on the specific things that you feel that you want to both test and learn. So, please take time to think through this in advance. This will help you to maintain your focus and allow you to make a decision that is a bit more soundly based.
Tip #2 Research the Internet. Preliminarily, one of the first things that you should do on the web is search your prospect's website. Is it professional? Does it seem like they are hiding and not willing to provide easy access to themselves? Does it begin to answer at least some of the questions that you have? The web is full of additional ways to research someone. Although it isn't a perfect science, you can still discover quite a bit just by doing a bit of online digging. If your person is, and/or her team members are supposed to be licensed, you can verify this. If you are trying to learn if your prospective partner has a really poor reputation, you may be able to discover this as well. And, because of social media and sites like Facebook and others, you can sometimes get a good glimpse of who your prospective partner is personally by viewing what they like, value, and who their friends are. You may need to gain their permission and become their "friend" for this, but if your prospect has nothing to hide, they should be willing to allow you into their world. Again, this is not an exact science. There are people who are sophisticated and know how to do good online reputation management. But, by searching the web, you should be able to eliminate quite a few prospects.
Tip #3 Do a Criminal Background Investigation. This tip is a short and simple one, but often overlooked. With just a small amount of information, you can use a number of online services to see if your prospective partner has a criminal background that involves fraud or anything else that you wouldn't be comfortable with. Although I am a firm believer that people make mistakes and can be changed, this does not mean that mistakes don't have continuing consequences. And, unfortunately for those who have made the mistakes, especially as it relates to financial matters, not being able to successfully participate in certain types of employment or business activities is one of these consequences. In this case, if you find that someone has been convicted of any crime that causes you to question their integrity, then you should simply move on to someone else. Your money has been too hard earned to entrust it to someone who has a criminal background that makes it difficult to trust them.
Tip #4 Ask for Referrals. This step and the next few will come as you get closer to selecting your prospective partner and purchasing your first investment property with them. If your prospective partner and team has experience, they will have those who should be happy with their services and that they should be willing to refer you to. Warning - you probably will NOT be able to speak to any referrals until you have proven that you are committed to taking the steps necessary to become their client and this is for good reason. It isn't reasonable to expect that they would provide you and hundreds of others with their client's information without a deposit or escrowing funds for at least one investment home. This doesn't mean that your escrowed funds have to be in jeopardy, and this should be spelled out in writing. It does mean, however, that you have moved far enough in the process for your prospective partner to feel comfortable that you aren't waisting their time. Remember, you are dealing with people who run businesses and hopefully, if you are going to be working with them, they have successful businesses. They have to also be sure that you are someone who is serious, not waisting their time and that they want to do business with as well. So, while you are gathering info about them, they will also be gathering info about you.
Tip #5 Hire an Independent Inspector. Assuming that you have escrowed a deposit for a home at this point, you should still be looking to determine if you have chosen the right partner, who will help you to only invest in the right areas. Without asking for a referral from your prospective partner, you should get an independent third party to review any potential homes that you will purchase and the areas that the homes are in. The information that your prospective partner has provided should be validated by your third party. If it is not, you will have to evaluate any discrepancies and potentially move on to another potential partner after receiving a refund of your deposit or escrowed closing funds.
Tip #6 Take a Trip to Meet Your Prospective Partners. Investing overseas is a major commitment. And, yes, you should be purchasing a management free investment. However, the quality of your investment is in direct relation to the quality of the partners who you will work with to sell you the investment and provide management for it. So, what is most important is to select the right team. One great way to do this is to actually visit them. I realize that this will not be the cheapest trip to take if you are coming from overseas, but the benefits of meeting your prospective partners will far outweigh the costs. If you haven't been referred by a trusted friend or family member, who your prospective partners are currently servicing, it is much cheaper to invest a few thousand dollars upfront for travel, than the loss of tens of thousands of dollars later - after investing, to discover who you are truly working with.
Tip #7 Trust Your Instincts. It has been said that decisions are made emotionally and justified rationally. If this is the case, then measuring how at peace you feel with your new Real Estate Investment Partner needs to be considered. After you have done all of the aforementioned steps and you are satisfied that they are the most logical choice, you still have to measure where you are emotionally. Do you 'feel' like they are a good fit? Do they feel like the partner who is going to really be concerned about helping you to achieve your financial goals? Or, are they just trying to sell as many homes as possible without a sincere regard for the well-being of you, their client?
Although the tips above won't guarantee success, I am convinced that these steps will at least dramatically increase your odds of success. And, it should give you a greater peace of mind, knowing that you have done some pretty good foundational due diligence prior to making a major investment partnership decision and investing in cash-flow homes.
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International Investor's Guide to Purchasing Detroit Investment Properties
International Investor's Guide to Purchasing Detroit Investment Properties