Hello BP Community,

Sorry if this questions seems a little simplistic, I'm looking to buy a multifamily in the Worcester market and was wondering, wouldn't I need to find a PM that I will use for the eventual purchase, and use their knowledge to leverage my due diligence on estimating cost/expense for the monthly upkeep. I figure I can then look at the properties' income and expense report and see if this property will cash flow. Or do I find a RE agent that is investor friendly and start with the searching.

Any advice will be greatly appreciated.  Thank You

Jerry

We do a lot of investment deals for people and are based out of Worcester. We can help you get started.

There's no reason not to look for both. But you can't manage a property without buying one, so getting a broker would be necessary first (unless you buy directly). 

I would consider having an initial conversation with PMs in the area as a potential client of theirs and to "pick their brains".  However, I would not make my decision based on the PM first.

I suspect there would be subtleties and nuances in how the PMs would talk with you before versus after the purchase.

I suspect the RE agent route would yield more possibilities.

Good luck!

As a real estate agent who actively works multis in Worcester i feel that the Agent comes first. Depending on the type of property and type of tenants that the property typically sees, i would recommend different property managers. As mentioned above you cannot manage something you don't own. Also it is important to know the neighborhoods and what you are looking for. If you want cash flow some neighborhoods are better. If you want low turnover tenants, others are better. Those are all things i deal with on a daily basis. It is important for you to be comfortable with the asset you are purchasing, then have your PM manage and grow that for you. Most PMs are eager to talk to you if they have been recommended by a Realtor

@Patrick C. Sullivan 

Thank you for reply.  I will reach out.

Thank You all for that helpful advice. If I'm looking at a house for sale on Redfin or Trulia, how would I know if that a good deal or not, if I don't have the insight that a PM have, in respect to what expenses might be. Would an investor friendly agent know? Would I use the high-level rule of 50% of gross income for expenses and see if mortgage will cover the rest?

Thanks again everyone for your input.   

@Brian J Allen ; @Scott P. ; @Andrew Syrios

Sorry forgot to tag everyone correctly before replying. 

Thank You all for that helpful advice. If I'm looking at a house for sale on Redfin or Trulia, how would I know if that a good deal or not, if I don't have the insight that a PM have, in respect to what expenses might be. Would an investor friendly agent know? Would I use the high-level rule of 50% of gross income for expenses and see if mortgage will cover the rest?

Thanks again everyone for your input. 

@Jerry Tan Find and build a relationship with your PM asap. 

Don't go find one agent- start building relationships with multiple and express your interest in off market deals.. doing all that you can to establish some feeling of credibility with them. They're not going to want to give you the good deals at first unless you can somehow convince them that you're a closer, but a consistent effort with some patience will have you getting deals thrown at you left and right :)

@Elliott Elkhoury   Thank for the advice.  I read numerous times on the BP forums on how PMs can make or break a out of state property, do you agree?  There are numerous blogs on how to vetted a PM, if I follow those guidelines, would that lessen my chances of finding the wrong PM?  

Thanks again

@Jerry Tan that's so true- and because of that you'll want to choose a market where rentals are resilient enough to withstand management mishaps.

*You have to have to have to pick a place with a high price to rent ratio. 1% deals don't cut it. That way your extra cash flow can help in the event of slightly higher vacancy or maintenance while you figure out your management situation.

*Another KEY factor that a lot of people (including myself until I actually did a bunch of deals) overlook is rental supply/demand in a market. High rental demand in a market means if your property manager sucks at marketing units or has operational inefficiencies, units are still going to fill due to higher tenant need. Do this in a market with an excess of rental housing supply and you're going to suffer vacancies.

*Make sure you pick a market with very landlord favorable laws as well- you want to be able to remove people at a low cost if things don't go well & you want tenants to know how easy this will be for you before they move in.

One other thing everyone should do when selecting management: ask for a fee schedule for a variety of different types of service calls, and ask for a scope of work or two for some unit turns they've done so you have an idea of what to expect for maintenance and repair costs. Some management companies turn this into a profit center- you don't want to work with them. 

Having a vetting process is important- but tedious and far less foolproof than just getting multiple referrals or finding a management company with many positive investor reviews online. Referrals are key. Anyone can learn to interview well, and there are a lot of great bull*****ers (I didn't know if I had to censor the second t? lol) in these OOS markets that prey on CA and NY investors like ourselves.  

Let me now if you need anything else!

@Elliott Elkhoury

Thank you Elliot. This is great information. I'll make a note of this when I vetting the PMs.

Thanks again

Originally posted by @Jerry Tan :

@Brian J Allen ; @Scott P. ; @Andrew Syrios

Sorry forgot to tag everyone correctly before replying. 

Thank You all for that helpful advice. If I'm looking at a house for sale on Redfin or Trulia, how would I know if that a good deal or not, if I don't have the insight that a PM have, in respect to what expenses might be. Would an investor friendly agent know? Would I use the high-level rule of 50% of gross income for expenses and see if mortgage will cover the rest?

Thanks again everyone for your input. 

The thing to do would be to run a CMA and compare it to recently sold, similar properties. The easiest place to do this is the MLS, but you can do it on Redfin and Zillow as well. An investor friendly agent could also run a CMA for you to give you an idea of its value.

@Andrew Syrios   

Thank You Andrew. My goal is to buy a 6+ unit multifamily. So would I would have to ask a real estate agent or PM that I trust for the average cap rate for that neighborhood?

Thanks again

Originally posted by @Jerry Tan :

@Andrew Syrios  

Thank You Andrew.  My goal is to buy a 6+ unit multifamily. So would I would have to ask a real estate agent or PM that I trust for the average cap rate for that neighborhood?  

Thanks again

 A real estate agent would be more helpful in that regard.

@Jerry Tan

I would go with an agent first, but no reason to not search for both. What size property are you looking at? (sorry if someone else already asked).

@Grant Rothenburger

Thank you Grant for the advice. I'm look for a 5 - 10 unit multifamily in a B or C+ neighborhood, that attract a good pool of tenants. I wanted to look at a deal and recognize if it's a good deal or not. My thinking was talking to a PM to get a sense of what expense should amount to. This way I can roughly calculate the NOI and see if the deal make sense. Right now, I still unsure, what's the average for electric, gas, taxes, insurance, etc.,

Thanks again.

@Andrew Syrios

Thank you Andrew for the advice.  I will start doing reaching out to both concurrently and just try to learn as much as I can about the market.  On a whole, how long would someone starting out take to really learn the market, is that really just subjective.  Do you talk to RE Agents, PMs, other investors in that area?

@Jerry Tan 

PM me for the property management company that would give you that info