Out of town rentals? 40 posts by 20 users

Posted: 04/22/2008 at 10:23PM

I've noticed several of you mention you buy rentals out of your town and state. How do you manage the rentals while living in a different state? Do you use PM primarily? How does that work for you if you do?

I really like the idea of buying in different cities, for one thing I love to travel when I get the chance but more importantly you can pick out specific markets and don't have to wait for your own backyard to become workable.

What do you usually pay in PM fee's and how do you find a good PM? RE agent recommendations?

Posted: 04/23/2008 at 01:05PM

Although I'm new to this site, I own a few properties outside my local and have been lucky with my selection of PM in the areas I own. Most of the luck was because I did some research with local REIC's where I bought. The best part about using Locals is they know all the ins and outs of that particular city/state. I think you can get some great insite by using this site and the hands on knowledge of the investors posting here.

Posted: 04/28/2008 at 01:26PM

All of my rentals or out of state and property managers are used on all but two of them. If you plan on duing multiple investments in the same area, I suggest you make the effort to interview several and get references. Usually, full service PM charge 8%-10% of collected monthly rents plus a one-time placement fee ranging from 25%-75% of 1st month's rent.
All of this is negotiable as are all the items in the PM agreement. When you have multiple properties in one area, always ask for the " investor's discount" . I never pay more than 8%, and never pay for the PM to arrange for repirs/maintenance as that is part of their 8% monthly. Many of them try to stick you with additional expenses. You should never agree to them. The contract between you and the PM is the single most important aspect.

Also, make sure you include verbage in the contract that states you reserve the right to cancel the agreement with 30 days written notice. This allows you an out in the event that you are not satisfied with their services.

Many PM will argue that the contract theu use is the " standard" contract and was written by the best attorneys i the state. That may be true, but it was written on their behalf and not yours.

Get educated on contracts and how to protect yourself. Use an attorney if necessary. Remember a PM can make or brake your investment.

Posted: 05/30/2008 at 10:26AM

Thanks for the info everyone.

Posted: 06/02/2008 at 05:24PM

I agree with Primo - BUY LOCALLY, especially in the beginning. Investing long distance adds a lot of risk and usually does not end well. During the boom, we had a lot of California investors in my area. Almost without exception, they lost a bunch of money are are now out of business. No thanks!

Good Luck,

Mike

Posted: 06/03/2008 at 08:57AM

No one will manage your properties better than you.

As Primo and MikeOH emphasize, build a local base and build up your cash flow and experience.

It's a lot easier to become a 'local' expert regarding good/bad neighborhoods, rental rates, property prices, etc. in your own back yard - then it is to gain the same expertise in a strange place.

Posted: 06/04/2008 at 10:06AM

Did you use a PM or just manage it yourself?

Posted: 06/07/2008 at 02:01PM

I have to disagree with the buy local only posters. Although Mike runs a great landlord business for himself, he is full-time and happens to live in an area where it is possible to purchase cash flowing properties. That does not hold true for everyone.

Typerider Wrote:

No one will manage your properties better than you.

The key is to hire the right PM as someone else stated. Having an experienced, recommended, and local PM who knows the area and the business is crutial. It remains the investor's responsibility to " supervise" the PM.

It's a lot easier to become a 'local' expert regarding good/bad neighborhoods, rental rates, property prices, etc. in your own back yard - then it is to gain the same expertise in a strange place.

I would try and stay within a 60-90 mile radius around your primary residence first. Get good at buying properties where you live and then once you are a pro look at out of town rentals.

Posted: 06/07/2008 at 04:45PM

I live in Monmouth County, NJ, and just closed on my first rental property in Trenton yesterday - 60 miles away. There was just no way to find cash flowing properties in my immediate area. There are plenty of opportunities in Trenton, and probably the very southern parts of NJ as well.

Another poster on this site, Pete Kandra, referred me to a very knowledgable and helpful realtor in Trenton, and he in turn referred me to a great handyman. He's already done some work for me and did a fine job.

Now comes the fun part - finding and qualifying tenants!

Posted: 06/07/2008 at 09:25PM

It's a lot easier to become a 'local' expert regarding good/bad neighborhoods, rental rates, property prices, etc. in your own back yard - then it is to gain the same expertise in a strange place.

Again I disagree. With the technology age, doing your due diligence is the same in your backyard as it is out of state. It is no more difficult.