Is it worth it to long-distance BRRRR for 1 property?

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Is it worth it to long-distance BRRRR for 1 property?

Laura Hunt
Member since 2019 · 15 posts · 6 votes

We are currently living in Corpus Christi, TX, but will be moving to Dallas in 6 mo. If we bought a house here, our kid (plus 2 of her friends) would be the renters for a year or so, but then we'd need a property manager for just this 1 property. Wondering if it's worth it to get a property manager for just one property for the foreseeable future in a locale. Also, this would be our first deal (so factor in newbie uncertainty).

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  • Kathy Henley
    Rental Property Investor · St. Louis, MO · Member since 2014 · 741 posts · 424 votes
    6y

    I don't know your market @Laura Hunt You will have to look at the numbers. To be a successful investment property, the rents must cover the principal, interest, insurance and property tax, plus a little left over for upkeep. A quick thumbnail is that the monthly rents must be 1% of the purchase price to get a second look. And vacancies suck. (For this reason, multifamily properties are my preferred investments.) Your analysis must include property management fee (8% of collected rents) because you will be out of the area. Analyze the deals and decide if it makes sense. Skip the part about your kid living there. There has to be a demand for housing for years to come, to make it a success.

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  • Laura Hunt
    OP
    Member since 2019 · 15 posts · 6 votes
    6y

    Great points, thanks!

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  • Kyle MccawBusiness Member
    Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
    6y
    1. @Laura Hunt 
    2. You can certainly self manage from a distance. But do you really want to have it constantly on the back of your mind? A few things to think about.
    3. Setting the right rental rates: While looking through the classifieds to see what other landlords are charging for similar properties is a fine way to ballpark your rent price, a good property management company will conduct a thorough market study in order to set a rental price for your property, ensuring that you achieve the perfect balance between maximizing monthly income and maintaining a low vacancy rate.
    4. Collecting and depositing monthly rent payments on time: If you've ever worked in a billing department, you know that securing payment from clients can be difficult, not to mention awkward. Property management companies have efficient, tried-and-true systems in place to effectively collect rent and maintain on-time payments. You'll find this particularly important if you have a limited number of properties, and collecting payments on time is crucial to maintaining your cash flow.
    5. Marketing and advertising your property: Through long experience, a property manager will know exactly where to market your property and how to craft compelling advertising materials---a significant advantage when it comes to filling your properties quickly and avoiding long vacancies.
    6. Finding the right tenants: Experienced property managers are experts at finding good tenants, and will take care of all the details, including the securing all criminal background and security checks, running credit reports, verifying employment, and collecting previous landlord references.
    7. Managing tenants: In addition to finding good tenants, a property management company will manage all aspects of the tenant-landlord relationship. The property manager will handle both routine and emergency maintenance, take care of routine inspections, and manage any situations where conflict resolution is required. Are you able to make the hard decisions like evicting a bad tenant? I can't tell you how many times I have seen owners get run all over by tenants.
    8. Managing vendor relationships: Property management companies have relationships with maintenance workers, tradesmen, contractors, suppliers, and vendors that it's almost impossible for an independent landlord to duplicate. Not only will your property manager get you the best work for the best price, they'll oversee any necessary maintenance projects.
    9. Ensuring that you're in compliance with housing regulations and property laws: There is a multitude of applicable laws and regulations to abide by when renting and maintaining your rental property. These include local, state and federal regulations, as well as fair housing regulations (such as the ADA). A property manager can help you avoid lawsuits by keeping your property up-to-date and in compliance with these regulations.
    10. Enabling you to invest in geographically distant properties: If you manage your own properties, you're pretty much limited to investment opportunities within a tight radius of your own home. By hiring a property manager, you can take advantage of investment deals in any location you wish.
    11. Maximizing the profitability of your time: By having a property manager take care of the day-to-day aspects of running your income property, your free to spend your time identifying further investment opportunities or otherwise furthering your career.
    12. Maximizing the profitability of your money: Most property managers charge a percentage of your property's monthly rental rate in exchange for their services. The rate typically runs anywhere from 6-10%, which is generally less than the money you save by hiring a professional to take care of your property.
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