Finding tenants out of town (without a property manager)

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Finding tenants out of town (without a property manager)

Matthew Wagner
Seattle, WA · Member since 2016 · 4 posts · 1 vote

Hey guys --- I'm closing on my first REI property in Charlotte, NC on 09/01. I am from that city, but I currently live in NYC -- which is clearly prohibitive for a first time investor to try and wiggle into the world of real estate investing.

Anywho, this property I'm purchasing is a 2 bedroom, 1.5 bath townhouse located in a pretty convenient part of town. I got it for 102k, putting 20% down, after everything is added in, looking at around 830 overhead (P&I, taxes, insurance, and the damn HOA fees).

I feel confident I could get at least $1100/month for this place, but my current dilemma is that I don't know how to really advertise and get tenants in place.  My friend recommended ***********, which seems okay in the long run, but I close on Friday 09/01 and I'm back to the city on Tuesday.  I guess I could list it on *********** and try and get showings that weekend?  What are your guys' strategies for those that don't use property management?  Or should I just eat it and get a property manager and cut into the cash flow?

I have plenty of liquid assets to get me through, so I'm sure I'll make some costly mistakes along the way, but I want to try to mitigate as best as I can.  Thanks for the help guys, and pleasure to be here!


Matt

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Chris ClaflinPro Member
Vendor · Charlotte, NC · Member since 2014 · 44 posts · 25 votes
9y
Hi Matt, Similar to what Raul said, the most important asset you have as an investor is your team. I would even put team before market and property. As for finding tenants from a distance, I would be pretty concerned. That's something I would never do for my own rental properties unless I had a trustworthy property manager. I wouldn't even do that if I knew the tenant beforehand. I think the couple of scenarios below (REAL stories from people I know who have done exactly what you are describing) may help with this point: - Tenant doesn't know the first thing about home maintenance; you get a call because the fridge goes out at 10PM on a Saturday. What do you do? You ask the tenant how everything else is going and they tell you good except for the bucket on the kitchen floor that has been accumulating water from the leaking roof for the last 2 months. - Tenant looks great on paper. Pre-pays rent months in advance. All seems great. Nine months down the road you make it out to the property to find they have been destroying it. Then you get contacted by the Feds to find out he is the largest coke dealer in the state, but none of that showed up on the background check you ran. Also, you want to think about the practicalities of managing yourself like do you want to research what you can legally charge for late fees, all the ways you can get in trouble with fair housing, how to properly setup, document and perform accounting on a trust account for deposits in NC (yes the security deposit act applies to DIY landlords in NC). Think about what happens when the tenant has an emergency repair but you don't have phone service because you are on a plane or in a remote location. Who is going to check the work your vendors do? Who is going to meet the vendor at the property if the tenant can't be there? How do you know who is really living there? Lastly, a good Charlotte Property Management company should be able to help you become a more savvy investor and help your investing grow in this area by connecting you to other great folks and providing you with great information. Let me know if I can answer any questions you may have, Matt about investing in Charlotte, tenants, buy and hold, or Charlotte area property management!
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  • Raul R.
    Rental Property Investor · New York City, NY · Member since 2017 · 493 posts · 386 votes
    9y

    Matt,

    I also live in NYC and invest in Charlotte, bought my first property last year in 1/16 and Purchased my 2nd Property 3/17. Yesterday I made my offer on 3rd Property, crossing my fingers by end of this week I should have an answer..

    My first Property I manage myself, 2nd because I rent out all the rooms to College Students (4 in total) I have a Property Manager.

    Most PM in Charlotte will charge you 8% of your rent per month, the finder Fee for finding Tenants varies from company. At first I was being charged 1st month rent as a finder fee, I negotiated it to half month rent and it wasn't easy. My Realtor is my advocate, her agency does PM as well so I lucked out..

    In total I've had 2 different PM's, i fired my first after 6 months and because my Tenant turned out to be excellent I decided to Manage property myself..

    After learning from my mistake what I looked for with a PM is a PM that does direct deposit on an exact date every month, my first PM mailed the checks. I always received my checks but sometimes they came late, my thought was if I expect my tenant to pay by certain date I expect my Check on an exact date.

    I would rate my current PM company 6.5 out of 10, I would recommend them because I know they are all the same or worst after sharing my experience with other Investors.

    If you decide to do it yourself make sure you have your network/team ready in place. You mentioned you're from Charlotte, so maybe you have family or friends that can help. 

    Your network should include: Handyman, Lawyer, Accountant, Realtor, and because we invest in Charlotte, a good HVAC company ( I learned the hard way :) )

    The X factor will be your future tenant, if you have an excellent tenant quite frankly you will not need a PM for 1 REI but if your tenant ends up being high maintenance, or forgetful in paying rent its good to have a PM to handle these hassles.

    I would suggest to get a PM, read the contract and after 6months or lease expires you will have a good idea what type of Tenant you have and then you can decide in doing it by yourself or not.

    Raul R

    0Reply
  • Chris ClaflinPro Member
    Vendor · Charlotte, NC · Member since 2014 · 44 posts · 25 votes
    9y
    Hi Matt, Similar to what Raul said, the most important asset you have as an investor is your team. I would even put team before market and property. As for finding tenants from a distance, I would be pretty concerned. That's something I would never do for my own rental properties unless I had a trustworthy property manager. I wouldn't even do that if I knew the tenant beforehand. I think the couple of scenarios below (REAL stories from people I know who have done exactly what you are describing) may help with this point: - Tenant doesn't know the first thing about home maintenance; you get a call because the fridge goes out at 10PM on a Saturday. What do you do? You ask the tenant how everything else is going and they tell you good except for the bucket on the kitchen floor that has been accumulating water from the leaking roof for the last 2 months. - Tenant looks great on paper. Pre-pays rent months in advance. All seems great. Nine months down the road you make it out to the property to find they have been destroying it. Then you get contacted by the Feds to find out he is the largest coke dealer in the state, but none of that showed up on the background check you ran. Also, you want to think about the practicalities of managing yourself like do you want to research what you can legally charge for late fees, all the ways you can get in trouble with fair housing, how to properly setup, document and perform accounting on a trust account for deposits in NC (yes the security deposit act applies to DIY landlords in NC). Think about what happens when the tenant has an emergency repair but you don't have phone service because you are on a plane or in a remote location. Who is going to check the work your vendors do? Who is going to meet the vendor at the property if the tenant can't be there? How do you know who is really living there? Lastly, a good Charlotte Property Management company should be able to help you become a more savvy investor and help your investing grow in this area by connecting you to other great folks and providing you with great information. Let me know if I can answer any questions you may have, Matt about investing in Charlotte, tenants, buy and hold, or Charlotte area property management!
    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    Hire a PM company to bring you a tenant and pay them a one time finders fee.

    0Reply
  • Matthew Wagner
    OP
    Seattle, WA · Member since 2016 · 4 posts · 1 vote
    9y

    @ Raul R.

    Thanks for your response!  I greatly appreciate the detail and the personal experience.  I used to work in the University area ... UT North?  I'd love to chat with you about Charlotte and your experience further if you're willing to shoot me an PM!


    @Chris Claflin

    Very valid points ... and I hadn't considered when I would be unavailable, which is often due to work.  Thanks for pointing those out.  I'll be checking out your management company online.

    I guess I'm worried most about despite getting the house at a good price, when you begin adding everything up, it doesn't allow for much wiggle room!  What, generally speaking, is the amount of money you're looking to net a month?  I was hoping for $300, but I'm not so sure that'll happen ...

    0Reply
  • Chris ClaflinPro Member
    Vendor · Charlotte, NC · Member since 2014 · 44 posts · 25 votes
    9y
    Matt, Regardless of if you hire a PM or not, you always want to factor in the cost into your numbers because 1) RE investing is supposed to be passive 2) What if something happens to you and you can no longer manage it and 3) Your time to manage is worth something. If there isn't enough cash flow to cover a PM, then you may want to make sure the deal is still really tight for you. Regarding criteria: everyone has different criteria; it depends what you are investing for... cash flow, appreciation, or...? Sorry to be generic but only you can decide if a deal is good enough for you. Happy to help however I can!
    0Reply
  • Taylor Brugna
    CPA · New York, NY · Member since 2016 · 203 posts · 132 votes
    9y
    Matthew Wagner For an out of state investor, I can't stress the value of a good property manager enough-especially if you plan on growing. If you find one that you don't like, keep looking and find another. You want systems in place that work for properties down the road, not just this one. 8% and placement fees might sound like a lot, but in reality it's a mutually beneficial relationship if you have a good one. Instead of dealing managing you can work on finding the next deal-which will net you a higher return on your time. Good luck!
    0Reply
  • Chris ClaflinPro Member
    Vendor · Charlotte, NC · Member since 2014 · 44 posts · 25 votes
    9y
    Originally posted by @Account Closed:

    @Chris Claflin The landlord should never expect the tenant to do maintenance because that is landlord's responsibility, and the tenant should tell the landlord when something goes wrong, and the landlord should take care of it at that time.

     John, you're right. Asking a tenant to do repairs is just begging for trouble. The tenant should tell the landlord when something goes wrong. However, my point was that not all tenants know how to recognize maintenance issues until it becomes a very big deal. If you don't have eyes on the property, problems can go unnoticed for much too long.

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