BiggerPockets

Hello everyone!

I looked in the message boards for my answer but could not find it. My wife and I live in the bay area and are looking to buy our first apartment building (appx 8 units) in fresno. Fresno is 188 miles from us so we would need a property management company.

Does anyone feel that on this small of a building that the property management fees would eat too much into our cashflow and it would make more sense to buy something closer so we can manage it ourselves? On our first property and it being rather small does anybody feel we should manage it ourselves? We have thought about moving back to Denver to invest where it may be more feasible.

Everyone will likely have a different opinion about whether or not to manage the building yourself, but IMO you should let a professional do it. 8 units is a good cutoff for your first building. Larger properties are significantly more complicated to manage.

If you manage the property yourself you need to bake the cost of your time into the underwriting for the asset to be an apples to apples comparison. My guess is that your time may be worth more than you would pay a professional to do it.

Everyone else has given good advice so far. My first larger property (12 units) is in Minnesota and I live in Denver now. However I used to live close to where I bought It and I know the area very well. It all depends on how well you know the Fresno area and if you feel comfortable investing there.

Also I have managed some of my single family houses myself before but I hired a professional management company to run my 12-unit, mostly because I knew I would be moving. After about 5 months of working with them I will never buy another property if I cant afford to have it professionaly managed. It has been well worth the money IMO and has saved me a ton of time. But like the others said you have to due just as much research on your mangement company as you do on the property itself. With this being your first apartment building they can either get you off to a great start for your investing career or make you regret it and stop investing completely.

Hey Mitch,

At your level of 8 units typical fees for property management run 8 to 10 percent of collected gross rents.

If you can buy 50 units or more typically you can get a 5% management fee for volume.

188 miles away is not going to work to run yourself.A key when buying is what is the condition of the complex as far as structure and mechanicals??

You can bet if it is older and not redone recently you will constantly get calls for repairs and problems.Also pay attention to the terms of the leases you are inheriting as that can be a major headache.

Don't focus on just the fee charged but performance and what they do for that fee.
No matter the asset the property management company will either sink your asset or take it to new heights.

I like going to www.irem.org to search.They are specifically managers and go through extra training. You don't want someone with other interests running your property.

I don't do property management because I don't like the headache either for the low payout.I stick to sales only.

I invest only in Texas because I am familiar with Texas property laws, courts, etc. The general rule is that the closer the property is to you the better; however, many areas have better appreciation potential or current cash flow than others. The extra expenses incurred investing in properties far from home base must be accounted for, but as long as a realistic assessment is made of what these extra expenses maybe (travel costs, legal fees, management fees, tenant problems etc.) then an evaluation can be done to determine if the investment is worthwhile.

Hello Everyone,
I am working with a Company that has an exclusive relationship with the FDIC and its Loan Sale Advisors. Meaning, we get access to Bank-Owned & FDIC-Seized assets long-before the general public. Typically, acquiring assets for $.20 - $.30 cents on the dollar.
If you are a serious / interested investor, please contact me with your desired acquisition criteria: Specifically:
+Type of property
+Demographic
+Acquisition Level
+Acquisition Timeline

-Paul Allison
fpusaallisonp@hotmail.com