Real Estate Investor · Brooklyn, NY · Member since 2014 · 53 posts · 41 votes
Hey Everyone!
My primary focus is finding and purchasing an investment property through a syndicated deal within the year.
Because I live in Brooklyn and it's extremely expensive in my immediate market, I've decided to invest out of state. I have NOT started putting a team together in these markets (Northern NJ and Atlanta, GA MSA) but before I began I'm interested in what those of you who invest out of state do to build your "boots on the ground" teams. Other then calling and interviewing, what other things can be done to create a solid and trustworthy team in my out of state markets?
Side note, I just finished listening to BP Podcast 073: Investing in Rental Properties When Your Local Area Is Too Expensive With @Mehran Kamari (Amazing Podcast and highly recommend, thanks @Joshua D. )!
I live 1000 miles from my rentals and couldn't do it without the property managers I use.
I have owned these particular properties from 7-10 years
I have passed on some great deals in other areas simply because I couldn't find a trustworthy company. I don't want an agent who sells me the property to manage it for me. I want a full time manager who has years of experience and a GREAT reputation. There are perhaps 6 professional management companies in the city I invest and I interviewed them all. I got referrals and I asked other contractors, investors and property owners who they trust.
Unfortunately my agent just retired so I am searching for another to take her place. The first question I ask of an agent is "do you own rental property?" If they don't I likely will not spend much time with them. I do not want to train someone who really doesn't understand what I do and why I am doing it. Find someone who is willing to present your offer even if they personally feel it is too low. Most agents shy away from an offer more than 3 % below asking.
When I sell, which is rare, I ask several agents to look at the property and give me a CMA. I ask them to then give me a price that for sure would sell in 60 days and one for if I didn't care if it sat on the market but would likely sell in 6 months. You can tell a lot about the agent from that exercise. Not the least of which is whether they are inflating the price to get a listing. I also ask questions about their comps. That tells you how much time they spent on the CMA and can they defend their adjustments to value to balance the properties. Some agents also assume you know little about what is happening in that market since you live out of town.
Attorneys? I still haven't figured that out myself.
Network on BP. Set keywords for those local markets and see who is posting about deals there. In pretty short order you will be able to tell who is active and knows those local markets.
I live 1000 miles from my rentals and couldn't do it without the property managers I use.
I have owned these particular properties from 7-10 years
I have passed on some great deals in other areas simply because I couldn't find a trustworthy company. I don't want an agent who sells me the property to manage it for me. I want a full time manager who has years of experience and a GREAT reputation. There are perhaps 6 professional management companies in the city I invest and I interviewed them all. I got referrals and I asked other contractors, investors and property owners who they trust.
Unfortunately my agent just retired so I am searching for another to take her place. The first question I ask of an agent is "do you own rental property?" If they don't I likely will not spend much time with them. I do not want to train someone who really doesn't understand what I do and why I am doing it. Find someone who is willing to present your offer even if they personally feel it is too low. Most agents shy away from an offer more than 3 % below asking.
When I sell, which is rare, I ask several agents to look at the property and give me a CMA. I ask them to then give me a price that for sure would sell in 60 days and one for if I didn't care if it sat on the market but would likely sell in 6 months. You can tell a lot about the agent from that exercise. Not the least of which is whether they are inflating the price to get a listing. I also ask questions about their comps. That tells you how much time they spent on the CMA and can they defend their adjustments to value to balance the properties. Some agents also assume you know little about what is happening in that market since you live out of town.
Attorneys? I still haven't figured that out myself.
It depends specifically what you want to do. But if it's holding any properties, a property manager is KEY. All my properties are 2200 miles away from me (in Atlanta and I'm in LA) and 100% of whether they function or not is dependent on the property manager. Other players are needed too, but a PM is the big one. But then as far as what you want to do, depends if you are planning rehab houses or buy rent-ready ones or whatever as far as who else you need.
@Martin Scherer What a great point about finding an agent who also invests in rental properties and making sure they know what and why i'm doing what i'm doing. Thanks for the insight and good luck on finding a new realtor and a good attorney!
@Ali Boone I'm looking to buy and hold a turn-key or a light maintenance property. No out of state rehab projects, yet. I agree with PM being number one! If I may ask, how did you find/qualify/etc. and have confidence in your current PM on your properties?
Property manager is key to the success of long term buy & hold.
I am out of state investor that has hold properties in TX, GA & NV.
I had been invested in GA over two years already. I had to switch over three property management companies in the past 2 years.
All the property management issues in GA, I did not encounter in my TX & NV property management. As a matter of fact, I had talked to more than 4 out of states investors in the last couple months; regarding their own property management issues in GA.
You can probably read a lot of GA property management issues on past post on BP. Good Luck, I wish I can provide you more useful & helpful property manager tips.
@Tom Yung Thanks for the tip about GA, I'll be looking into that! In your experience, why do you think that is? @Ali Boone Do you come across this as well?
The main PM I have took me about a year to find. It just required a ton of calling different ones, interviewing them, and hiring and firing a couple others before I found the good one. The other PMs I have outside of him came with the properties since they were turnkey. Turnkey-wise, I always start with the ones that come with the properties and then if I have any problems with them I change them out.
@Ali Boone Thats a long time to find a good one, and you're so far away. All of this was over the phone and occasionally visiting the properties or all over the phone?
Actually when I was doing all that, I was still living in Atlanta but it was still all over the phone. I've never visited the properties with the PM and I hadn't even met him in person when I hired him.
So far, there has been nothing with the properties or the PMs (even hiring and firing) that I've ever not been able to fix over the phone. I actually prefer to not visit my properties. I'm a huge perfectionist and if I even see a scuff on a garage door, I'll get super stressed which isn't practical to even worry about for a rental.
Thanks for starting the conversation. I just listened to the podcast too and am similarly inspired and similarly limited. I've got one deal done semi-locally, but am looking to go out of state now given the limited opportunities where I live.
I also do not visit. I get photos semi annually. I have rentals I have never been inside as location and the numbers is what matters to me. I get excellent bookkeeping from my management company. They answer my questions and I see there advs for my properties which also include pictures on line .
I do visit all properties when I visit the town but I don't go inside and I have only met 2 tenants in 10 years.
I also started with a different management company who was good until the market turned and then I started getting lots of repair bills for outrageous prices. I still purchase used and reconditioned appliances from them as their machines are high quality and great prices but I won't use them to manage again.
Most property manager were hired by a Broker of a property management company, that runs the company.The property managers are not really experienced or has experience in dealing with the tenants. Some of them do not even has a salesman license, never mind professional designation like CPM.
I have also found dishonest broker when I first get into GA market in 2012. Since then that company is no longer existed. Like placing home warranty & alarm service. After I paid the invoices, he turned around & cancel them & pocket the money. Placing tenants in units without me knowing it. Terrible. I was lucky, I found out in one month, after he was hired.
Inflated repair cost is another ongoing issue with the GA management companies. There can be $1,900 difference between the price I get & the quote by the vendor of the property manager on a touch up paint on walls of 1800 sq ft home . Scary.
I'd like to add that making yourself attractive to the prospective PM/boots on the ground is important. If part of their success relies on you being successful, people are more motivated to make sure you're happy and things go well.
In terms of a normal PM you end up working with, them understanding and believing that you plan on owning more than 1 property and expanding (which means more $$ if they keep you happy) is key. As far as partnering with people, as long as both of your financial interests are aligned, there is that same motivation.
A super important thing to do is to ask for referrals for team members you're looking to add to your team. You should be able to connect with active investors here on BP in whatever market you're looking at. Ask them who they're using!
A great way to build your team in Georgia is to do as the local investors do. Join the GAREIA. There's a number of us who are active investors and help each other out with referrals for lawyers, contractors, PMs, financing, buying/selling, and local expertise.
You can get onto the 'Dealmakers list" and get a spreadsheet of recommended service providers.
Wish I had taken this as an early step, but it's especially important for someone without a local network.
@Rick Baggenstoss thank you very much! surprised i haven't thought to do that yet!! Thank you all for your responses. Good to know its common to invest out of state :)
How you folks manage partnership with PM company that is not in your own city? Do you just hire them or maybe someone is using J/V partnership deal with LLC?
@Rachel Randolph One thing that gets you "brownie points" right away is to be referred by a client of theirs already (either through a BP member or a local investor you know). Doing more than 1 deal helps a lot. Also, IF they do a good job once they are hired to work for YOU, referring them business is a big thing to keep them motivated to treat you right.
This is all assuming they are a smart company/person that understands keeping the people who bring them more business happy is important. Unfortunately not everyone operates this way :)