BiggerPockets

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?

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.

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.

Thanks for the info everyone.

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

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.

Originally posted by "Bohemiana"

We only have one out-of-town rental (across country) and it was good for the first two years when it was rented consistently but this last year we had a lot of maintenance and tenant issues, which were really hard to control/manage so far away. Fortunately, our handyman is honest but it would have been easy for him to rip us off. We are going to sell the unit and buy something locally. It's enough of a hassle to rehab & get new tenants when it's just a 10 minute drive away.

Did you use a PM or just manage it yourself?

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.

I here this statement all the time, and it is incomplete. Just because you have a PM manage your properties, does not mean you are out of the management loop. You still must manage your PM. This can and is done by phone fax, email, etc.

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.

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.

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.

Another incorrect statement. Not everyone lives in an area where this statement will work. Just as neenjafus asks, how can you buy in so cal and cash flow a property. It is not easily done, particularly for a newbie investor.

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!

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.

No way. There's no substitute for driving around an area to really know it. Until we have predator drones (OK, without the armament, except maybe for dealing with those late paying tentants) you can rent and fly around anywhere you want, you cannot truly know a location without driving around in it. If you're going to invest long distance, plan on flying or driving there and checking it out in person.