What Moving Out of State is Teaching Me About Remotely Managing Rentals
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So, I literally feel like a vagrant nowadays. I am never in one place.
I am writing this while sitting in the vestibule of a Kumon center in Columbus, Ohio, waiting for my kids. You might think, Columbus, why Columbus? Well, I am not allowed in my home in Lima at the moment.
Stop it! Patrisha did not kick me out. I am not like that. I am well trained, and I behave. Besides, the alternative, I heard, is way too expensive. 🙂
So, no, that’s not why I am not living at home. You see, I’ve got my house on the market, and to help things along, I’ve had it staged. And, well, we can’t live there with the staging in place.
So, we are one foot in Arizona. And the other foot is all over. A couple of weeks with my parents in Columbus, a couple of weeks on Kelleys Island, and I seriously don’t know where I’ll be next week. And for a Russky, who, as they say, doesn’t typically take a piss without a plan, this is all just a little naughty.
So, When Is the Big Moving Date?
Frankly, the sooner the better. As I mentioned, as of two weeks ago, my primary is on the market. It would be nice to have that sold, though I don’t think that’s in the cards. And I don’t care too much.
However, I am also looking to sell one of my apartment buildings (in fact, I am in contract on it), and I’m definitely waiting to close on that prior to moving. Things are moving along, so I hope within the month.
Why I Chose This Building to Sell
There is a specific way we all chose to think about what we do in this sport. My thought process is not too much of a secret, in that I believe you have to manage your own units, and because of this, a high priority to me is the quality of the asset. Buy the wrong asset, and you will kill yourself trying to make people behave.
We throw this word around a lot — systematize. But, what does this actually mean?! Well, after I sell this building, I will still be leaving 20+ units in Lima, which I will have to manage from Arizona. And throughout the process of readying for this, I am really crystallizing my thinking around what it really means to systematize.
And, of course, I am selling this building — and not another — precisely because unlike everything else in my portfolio, it doesn’t lend itself to systematizing.
This is not meant to be an advertisement for the Buildium (to learn more about Buildium, click here) platform, but this is what underpins my system. When my wife and I realized we would need to relocate our family around the middle of 2014, two things happened. One, I stopped buying more property in Ohio because I didn’t want to complicate my life with re-positioning of new assets. And two, I realized that we needed to streamline our management infrastructure.
In my search of a good tool, I talked to my good friends Brandon Turner and Serge S. Brandon offered to snail-mail to me some napkins and postcards — napkins to keep my financials straight and postcards for tenant notices — he said his system works wonderfully!
I passed. 😉
Serge pointed me toward Buildium. I had been using Quickbooks, which worked because we have three other companies on QB, but we always had to cut corners to accommodate real estate. And now, with Buildium, all of the rental applications are handled online, all of the leases are signed online, all of the tenant payments are handled online through their portal, all of the financials and reporting is online, and all of the showings are a function of a lockbox on the door. In other words, I ain’t got to be there for nothin’ — just my speed!
The Importance of Systematizing
The systematized approach I described is how I handle all of my units, aside for the ones I am selling. The tenants in this building are on fixed income, many are retirees, and most wouldn’t know what to do with a computer even if I handed one to them. They are wonderful people, and they pay rent every month — by putting the check into a slitted mailbox on the wall. But the internet is just hard.
Related: The Ultimate Guide to Adding Systems & Outsourcing to Work Less in Real Estate
In fact, one of the tenants asked me why I am choosing to sell her building but not the rest of my buildings, and when I explained that if I were to keep this building, she would have to start paying rent on her computer, she flat out said, “Oh no.”
Interestingly, this is one of my most stable buildings. The same attributes of the tenant profile that make it non-systematizable also make it easy to manage locally. The rents are not as high, but they are stable, people don’t move too much, and the economic losses are very controllable. With that in mind, I am sorry to let this one go, but I just couldn’t figure out a way to manage it long-distance.
Your Lesson for Today
I’ve been teaching people to buy “the right kind of buildings.” Throughout this transition, I’ve added another stroke to the picture of what that building looks like, which is this:
If you know you’ll get paid, but you’ve got to drive to pick up the check, you need to realize that you will need to be a local landlord. If this works for you, fine. But if your roots are not necessarily so strong in a particular location, then perhaps this building, as wonderful as it may be, is not for you.
Just today, I spoke to a student who now has six units, and he told me that while he uses Buildium to track rents, he still drives to do showings and sign leases. Why? Because the tenants in his buildings struggle online. Good, old Midwest.
Arizona, here I come!
Do you own out-of-state rentals? What systems do you use to manage them remotely?
Let’s talk in the comments section below.