Although initially designed for co-located teams, agile methodologies promise mitigation to the challenges present in distributed software development with their demand for frequent communication. We examine the application of agile practices in software engineering teams with low geographical distribution in Austria and Germany. To gather insights on challenges and benefits faced by distributed teams we conduct interviews with eleven representatives and analyse the interview transcripts using the inductive category formation method. As a result, we identify four major challenges, such as technical obstructions or the impediments different language abilities have on communication, and four benefits, regarding collaboration and information radiation, that agile methods yield in distributed teams. Based on our analysis of challenges and benefits, we deduct seven recommendations to improve collaboration, overcome distance and avoid pitfalls. Key recommendations for teams with low geographical distance include that teams should get together at certain points to build relationships and trust and share information face-toface.