Any reason to be near your property?

Question

First some background...  I've done multiple single family homes in Texas which is where i grew up but I now live in Washington. Property management company manages my residential properties in Texas and I'm a passive investor on a few apartment deals.

I am looking to do my own 10-20 unit apartment complex and the deals in Washington are not great. Also some new landlord rules up in Seattle are making it an unattractive market.  Texas  and a few other markets however seem more viable but i'm a tad concerned about distance. Ironically when I reflect on the fact that i have residental properties today on the other side of the country it isn't a problem at all.

What is the view here about doing your first multifamily deal in another state? Obviously i can fly in periodically for due diligence  etc  but do you guys/girls think it is a bad idea?

Account Closed · Answer

As long as you have a good management company it does not matter where you live. You just have to do your due dilligence on the management company as well as the property.

Mike Dymski · Answer

Jonathan, I would not discourage this investment strategy.  Just be cognizant that the 10-75 unit apartment space (pick your unit range) does not have a 3rd party management model that is dedicated to it in many markets.  It's too small for professional multifamily management and the SFR managers have a different business model, without multifamily vendors and suppliers for turns and maintenance.  Many SFR managers and owners can likely handle it very well but it may be more the exception than the norm in certain markets.  I had to get my 3rd party manager set up with multifamily flooring, painting, and supply vendors and different maintenance so that turns would be faster, more efficient and affordable.

Johnathan Norman · Answer

In Seattle... it is possible but you need to do all cash to get decent deals and a good network.  The market here is competitive but there are plenty of renters and I think betting on long term appreciation of prices in residential is a safe bet. I've never used these guys but you may want to check out http://vestus.com/

Bob Elliott · Answer

Any thoughts about BRRR in WV?

Leslie Pappas · Answer

Hi @Johnathan Norman, plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. Choose cities in safe and economically diversified areas with above-average income and population growth. It's can also safer to diversify your investment properties across the country.

I’m available if you have questions.

Steve Vaughan · Answer

Just attended a Washington Rental Owners Association meeting Tues night.  Our state lobbyist out of Olympia spoke for a full hour on the socialistic bills and ideas coming out of the city council in Seattle in the Capitol.

They are contemplating or have already enacted rules regarding no rent raises when service calls are unresolved, must show cause to terminate a m-m agreement, rent control, 5% capital gains taxes on RE sales (in addition to the 1.7% excise tax), pre-'78 lead inspections, periodic unit inspections, etc.

I'd stay out of Sociattle, I mean Seattle.  Support the WROA, Washingtonians!  This stuff can spread!

Johnathan Norman · Answer

well living in Washington is great.. beautiful place. however there is an aggressive push to implement rent controls and there is a new law in Seattle to force landlords to accept the first applicant for an apartment. The intent is to stop renter discrimination, employers prefer to hire tech workers in Seattle for example.

Also the market here is way too hot. Chinese investors are buying up properties and both residential deals and commercial deals are a bit over priced from my perspective.

http://www.seattletimes.com/opinion/first-come-first-served-renting-will-hurt-landlords-renters/

Lori Valene · Answer

Hi Johnathan,

I have several properties for sale in Texas.

Cooper and Sulfur Springs.

If you are interested.

Take care,

Lori