How to manage 4 Flex 1h45 mins away without property manager?

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How to manage 4 Flex 1h45 mins away without property manager?

Matta Nguyen
Member since 2018 · 9 posts · 1 vote

Hi.

So a little bit about my situation. I'm a 26 year old female that have full-time job and have been very interested in real estate. Right now I have the option to put in offer for either a Condo in Capitol Hill Seattle or a multi-unit in Tacoma city, WA. I live in North Seattle Area where it could take 1:45' to Tacoma and 20' to Capitol Hill Seattle. 

I have always been looking for a multi-unit with good cash-flow however Seattle area has been a tough market. Its price has jumped significantly last couple years (slower down now but still) , multi-unit having positive CF in my price range is  very competitive which  pushed my search to nearby Cities and led me to a 4flex in Tacoma. The four-flex is in good shape with solid income and low vacancy rate. I want to manage the place without property manager since I think it's a real practice for myself. Thinking about training tenants to paying rent through direct deposit or online software. I'm also planning to visit the property once a week or once every other week. 

However, I don't have the team with me at the moment, also the fact that I live so far from the place. The fear of having something breaks down, tenant's request when I don't know what to do or able to get there right away make me feel a little nervous of this deal. I'm thinking in getting contractors come and evaluate during the inspection period with the thought it I could potentially find a great contractor to work with if tenants have problem...

At the same time, while searching for potential investment, I came across a 2 bed-room condo in Capitol Hill with low HOA, It raised an idea in me that this condo could brought me great CF with short-term rental (airbnb). It is definitely not my ideal investment since I know how HOA and assessment are out of my control. However it is in prime location with desperate seller that I thought I could get a good deal from it.

Very different type of properties! I personally would want both in my portfolio but for now I have to decide and go with one that make more sense

...If it were you which one you would choose? and if you choose 4flex that is 1 hour and half away, what is the most efficient way to manage it by yourself? How to make a great team with you.

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Erich Bubbel
Real Estate Broker · Seattle, WA · Member since 2018 · 10 posts · 7 votes
7y

@Matta Nguyen. If you have the money to purchase the 4 unit, I would recommend going that route for your first investment because if one tenant moves out you won't fell the "pain" as much as if a single tenant condo were to go vacant.

It's a great idea to have an expert walk through the property with you on anytime of investment  but if you cannot get a contractor before you make the offer most likely you will still have some time during you feasibility period to get that done.

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  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 546 posts · 456 votes
    7y

    Hey Matta,

    I prefer MF any day over condos but it depends on your short or long term investment goals.  I had a property management business for four years and sold it.  We still hold rentals but I will ALWAYS hire a PM to manage my properties, even if they are right next door to me.  Here's something to consider.  It is easy to collect rent and fix a toilet but paying 6-10% in management fees is always worth it in the end, assuming you've found a solid PM partner.  Why do you want to deal with potential tenant headaches, especially when on vacation or something. :)  It is definitely recommended to have a professional PM if you are planning to own properties within the city of Seattle.  Do you know about the Just Cause Ordinance or the Tenants Union of WA state?  Look them up, scary stuff.  It's best to put distance between you and your tenants using a PM that should also be more familiar with local laws and uses best practices.  I feel it is always best to be the anonymous landlord.  Solid properties should be able to absorb management fees.  Happy to talk offline anytime if you'd like to chat further.  Best wishes on your investment goals!

    Broker at Multifamily Properties519 Reviews
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  • Erich Bubbel
    Real Estate Broker · Seattle, WA · Member since 2018 · 10 posts · 7 votes
    7y

    @Matta Nguyen. If you have the money to purchase the 4 unit, I would recommend going that route for your first investment because if one tenant moves out you won't fell the "pain" as much as if a single tenant condo were to go vacant.

    It's a great idea to have an expert walk through the property with you on anytime of investment  but if you cannot get a contractor before you make the offer most likely you will still have some time during you feasibility period to get that done.

    2Reply
  • Ronald Erwin
    New to Real Estate · Salem oregon · Member since 2017 · 29 posts · 5 votes
    7y

    i currently have rental property, in a different state. i live in Iowa, my property is in Oregon. you need to make sure when your doing your analysis, that maintenance cost is included in that. find a contractor  and call them when something goes wrong. example, my renters called me last month about a toilet that just continuously running. i called a local plumber they came out fixed the problem  and sent me an invoice easy. i have a friend in the state that comes and looks at the property every quarter. lets me know if anything is wrong that wasn't reported. my renters pay with direct deposit. its important to vet your renters make sure they know what you expect.

    0Reply
  • Matta Nguyen
    OP
    Member since 2018 · 9 posts · 1 vote
    7y

    @Brandon Vukelich: Hi Brandon

    Thank you for the genuine respond. 

    I'm actually looking for Property manager in Tacoma area to partner with at the moment to see if all the number make sense. The reason I thought about managing it myself because I have been dreaming to have a property management business myself and thought the best practice is getting my hand dirty plus the thought of reducing the expense for property management

    However as a newbie I haven't considered all the factors. Will need to look more into Cause Ordinance or Tenants Union + others. 

    0Reply
  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 546 posts · 456 votes
    7y

    I know a good PM in Tacoma and one in Seattle as well.  Let me know if you ever want references.  If you want to get into PM yourself, I HIGHLY suggest you join the Rental Housing Association of Puget Sound.  They have the best lease docs, classes, etc.  Best resource by far that helped when I had my own PM business.

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  • Matta Nguyen
    OP
    Member since 2018 · 9 posts · 1 vote
    7y

    @Erich Bubbel

    Thanks Eric!

    It's true that I'm a little concern about not finding people to work with (property manager/ contractors) before making the offer! But yes feasibility period might give me a little more time

    0Reply
  • John Barrett
    Rental Property Investor · Everett, WA · Member since 2015 · 457 posts · 386 votes
    7y

    @Matta Nguyen I prefer multifamily properties for the reasons Erich mentioned.  Spreading the risk of vacancy among the 4 units will give you more wiggle room to figure out the normal headaches and hiccups that arise when you are starting out.  We have always self managed our properties and I do feel it's the best course of action just starting out.  I believe the experience you gain (sometimes painfully) will make you much better investor and you always can decide later to hire a PM.

    My only caution on the condo is that you mentioned it has low HOA fees. If this is something you are going to purse I would look into this more. I would want to validate that the HOA is being sufficiently funded and there is not deferred maintenance or upcoming special assessments.

    Regardless of which investment route you choose to go, tenant screening will be critical to your success.  Join a landlord association and use their forms (leases & walk through) for the city you choose to operate in and follow the lease.  There are also numerous meetups where you can meet other investors to network and ask questions.   

    Best of luck with your investment.

    1Reply
  • Aaron NelsonBusiness Member
    Real Estate Agent · Seattle, WA · Member since 2016 · 307 posts · 191 votes
    7y

    @Matta Nguyen - I would go the 4-Plex route for similar reasons to what others are saying. Furthermore, if the returns from the 4-Plex do not support hiring a PM and you live 1.5hrs away, this probably is not the right deal for you. 

    With a SFR, I'd feel differently as managing a single SFR is more straight forward. If you're renting out a turnkey product the number of trips you'll need to make to the property will be greatly reduced. You get a different tentant class in Multifamily properties...especially a 4-Plex.

    Are there ways to mitigate this? Sure. A good handyman can manage most maintenance requests and you can use a PM just to show and lease up units but there are still going to times when you have to go to the property yourself. Trust me...My wife and I own and self-manage 10 rental units in the area and have a solid team but there are still times when we need to get in the car and drive down to thenunits ourselves. Example: we just had a furnace replaced at a rental in Lakewood. We knew this was going to be needed when we purchased the property and budgeted accordingly, but it doesn’t change the fact that we needed to make two trips down to meet multiple contractors for estimates and another to meet the city permitting inspector. Fortunately I am down in Tacoma quite a bit as an agent but schedules don’t always align and we still make extra trips. 

    Just my two cents. Let me know if you want to chat further. 

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  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    Hi! I would go for the 4 plex. If it is in good condition you should be fine with the distance.  I have managed my rentals from 600 miles away for the summer. Challenging but doable. 

    IMO you will need : appliance repair company, plumber, handyman. If there is landscape you will either need to do yourself (i find it is a good excuse to visit periodically) or get a landscape company. 

    As for rent payment: if they are on leases you need to honor those leases until expiration. When you resign new agreements you can stipulate different payment methods.  Check state law to see if you have to provide a non online method. 

    As for tenants knowing you are the landlord. I am the only person my tenants interact with. I learned the hard way that noone else will care as much as me and more importantly i dont want to be responsible for the mistakes and ommissiins of others.  

    I do always say “we” when i discuss my company - even tho it is just me :) it does give me an “out” if i need it (i aam sorry, but “we” cant do x y z) 

    Also most importantly : be sure to join the local (to your rental) state landlord advocacy group and get yourself to the very first landlord bootcamp class they put on.  You MUST understand the laws under which you will operate. 

    Good luck its a great way to be financially free and I personally love being a landlord :) 

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    7y
    Originally posted by @Matta Nguyen:

    Hi.

    So a little bit about my situation. I'm a 26 year old female that have full-time job and have been very interested in real estate. Right now I have the option to put in offer for either a Condo in Capitol Hill Seattle or a multi-unit in Tacoma city, WA. I live in North Seattle Area where it could take 1:45' to Tacoma and 20' to Capitol Hill Seattle. 

    I have always been looking for a multi-unit with good cash-flow however Seattle area has been a tough market. Its price has jumped significantly last couple years (slower down now but still) , multi-unit having positive CF in my price range is  very competitive which  pushed my search to nearby Cities and led me to a 4flex in Tacoma. The four-flex is in good shape with solid income and low vacancy rate. I want to manage the place without property manager since I think it's a real practice for myself. Thinking about training tenants to paying rent through direct deposit or online software. I'm also planning to visit the property once a week or once every other week. 

    However, I don't have the team with me at the moment, also the fact that I live so far from the place. The fear of having something breaks down, tenant's request when I don't know what to do or able to get there right away make me feel a little nervous of this deal. I'm thinking in getting contractors come and evaluate during the inspection period with the thought it I could potentially find a great contractor to work with if tenants have problem...

    At the same time, while searching for potential investment, I came across a 2 bed-room condo in Capitol Hill with low HOA, It raised an idea in me that this condo could brought me great CF with short-term rental (airbnb). It is definitely not my ideal investment since I know how HOA and assessment are out of my control. However it is in prime location with desperate seller that I thought I could get a good deal from it.

    Very different type of properties! I personally would want both in my portfolio but for now I have to decide and go with one that make more sense

    ...If it were you which one you would choose? and if you choose 4flex that is 1 hour and half away, what is the most efficient way to manage it by yourself? How to make a great team with you.

     Don't see why you would want to attempt to manage a property that far away from you own your own. It is not a recipe for success. I think you should either buy local or simply hire a property manager.

    0Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    If tenants are in place it isnt that hard - if you need to flip a unit then what i do is stay in town to flip then go back home. 

    If you have a lot of issues/vacancies than sure. But 4 units is not that big of a deal and it will teach you the ropes.  

    I guess i dont see why inshould pay someone 8-10% to do nothing? 

    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    @James Wise I agree . It all sounds lovely on paper till the furnace cuts out at midnight and your handyman is not getting up to fix the furnace or he’s drunk on a bar stool somewhere . How bout a bad water leak in the basement on a Sunday evening ? Landlording isn’t all calculations or algorithms . You gotta have a team and boots on the ground .
    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    7y
    Originally posted by @Dennis M.:
    @James Wise

    I agree . It all sounds lovely on paper till the furnace cuts out at midnight and your handyman is not getting up to fix the furnace or he’s drunk on a bar stool somewhere . How bout a bad water leak in the basement on a Sunday evening ? Landlording isn’t all calculations or algorithms . You gotta have a team and boots on the ground .

     As I always say "Spreadsheets don't rent properties. People do & people don't care about your spreadsheets."

    0Reply
  • Matta Nguyen
    OP
    Member since 2018 · 9 posts · 1 vote
    7y

    Thanks guys for your input.

    I'm actually still calculate Property management as item in deciding to purchase this place. Still reviewing some property managers's document + contracts in case I want to use one.

    To answer @James Wise's question, down the road in the next couple years I actually want to own properties and have my own property management company. :) I was first mainly looking at places that I can get my hand dirty by being a landlord and managing. This 4 flex came up with everything that I was looking for except the fact that it's further that what I wanted. Right now, I have one single family for rent close by but if this deal comes through, it would be my first multi-units. Kinda scary ... Still thinking about which approach I should take.

    0Reply
  • Matta Nguyen
    OP
    Member since 2018 · 9 posts · 1 vote
    7y

    @Mary M.

    Thank you Mary for your input! Have a couple questions:

    1. Do you come to your places every beginning of the month to collect rent?

    2. Have you ever had problem with tenants calling you urgently and you can't be there right away? if yes how do you manage it?

    3. How do you build a good IMO team? Finding people that you trust to work with?

    4. When you first bought your place, was it fully occupied or not? Which tool you would recommend for people like me to use in order to screen tenants?

    Again, I really appreciate all the support!! It's great seeing and getting supports from female investors that went to the route that I am thinking of  going. Making me feel like I can do it :) 

    1Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    @Matta Nguyen 

    #1, no I collect rent using ACH via my bank. It automatically draws rent each month. This is a great method, but you need a business account and your tenants need bank accounts too. 

    #2 yes, but i just call the plumber or whatnot.  For the time I was away for the summer, I had an onsite person that was my eyes and ears. 

    #3 my team I got lucky - I bought my units as they were being completed by the developer, and i used the builders to build some things at my personal residence - so I formed a good relationship with some of the workers and one of them is my handyman.  For plumber and appliance repair I just called around til I found someone I liked working with. 

    #4 yes, the developer had tenants in place when I bought altho I picked the last few before we closed. 

    #5 lots of different ways to do screening.  You can call around and see what company you like. I do use www.tenanttech.com to do the actual leases, applications, work orders, etc etc. it works great for a small number of units. 

    Feel free to PM me any time. I am going on my 3rd year now with this property and i really enjoy being a landlord :)

    1Reply
  • Scott S.
    Tacoma, WA · Member since 2014 · 77 posts · 92 votes
    7y

    Have you confirmed the condo in Capitol Hill allows short-term rentals?  Do they have a rental cap in case you have to rent monthly? 

    Seattle isn't exactly the most AirBnB friendly city and things could change at anytime and make it more challenging.  Also, King County home prices are starting to really soften (down 11% in last 6 months) .  I don't see any indicators that this trend is going to reverse anytime soon.

    I personally think the Tacoma 4-plex is a better investment but only if the numbers pencil out including a property manager.  Trying to manage a single family house from 2hrs away is one thing but the multi-family is going to have many more moving parts to handle (higher turn-over, typically worse tenants, tenant drama between the units, etc).

    0Reply
  • Account Closed
    Rental Property Investor · Everett, WA · Member since 2013 · 389 posts · 222 votes
    7y

    @Matta Nguyen buy a fourplex in Everett, then it is only 25 minutes away. I manage 100+ units in Everett and live in North Seattle. Returns in Everett rival Tacoma but of course the deals are harder to find up there since the population is lower.

    Whatever you decide, good luck and jump in! It is a good life.

    1Reply
  • Christen G.
    Rental Property Investor · Seattle, WA · Member since 2017 · 383 posts · 248 votes
    7y

    I live in Seattle and have small multi-families in Tacoma. It's not a bad commute if you time it right. I would hesitate to buy a condo in Seattle right now at peak market - unless you wanted to live in in an LOVVVED it. To start gaining passive income, go with the 4-plex in Tacoma if you can get it to pencil - it's getting harder and harder to do that off the MLS. I have a property manager I'd be happy to share with you if you'd like it .All the best to you.

    0Reply
  • Matta Nguyen
    OP
    Member since 2018 · 9 posts · 1 vote
    7y

    @Account Closed: Hi Grant, I took your advice and start looking into some properties in Everett now. Found a place that I think can provide me a good CF + easier commute. Will keep you update if I decide to go in with the offer!

    0Reply
  • Adrian Chu
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    7y

    Lots of good responses here.  It depends on what your priorities are.  

    I am not desperate for cash flow so I prefer to buy properties closer to me.  You could try to identify ways to make up for that lost cash flow by doing something that is within your core competency.  i.e. if you are getting $500 less cash flow because you are buying a property in Seattle instead of in Tacoma, then think of some way to make that $500 while not having to travel to Tacoma.  $500 is just an arbitrary number - you fill it in with what the situation is for you and determine the value of your time.

    Additionally, I also have a good team of maintenance technicians, laborers, and property management assistants who can better service properties that are closer to Seattle rather than further.

    Investing in RE is my passion (and my life) - so I'd be happy to chat with you and share thoughts based on your particular investment goals!  Best of luck!

    0Reply
  • Tim S.
    Investor · California, CA · Member since 2016 · 367 posts · 375 votes
    7y

    @Matta Nguyen  I'm wondering if you have any construction / home repair experience?  It will very very helpful to have some knowledge, it will be very easy for people to overcharge you if you don't have any background, it will be obvious to them.  BTW it's "four plex" not flex.  Using the wrong terminology will announce to people you are a noob, and make it more likely you will be taken advantage of.  

    0Reply
  • Carly Snapp
    Real Estate Broker · Tacoma, WA · Member since 2015 · 21 posts · 6 votes
    7y

    @Matta Nguyen - Tacoma multi-family all the way! I’m a Tacoma-native who is a bit biased though! I’ve got some good referrals in the area and would help analyze the property. DM me if I can help!

    0Reply
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