Rental properties out of state
New York, NY · Member since 2018 · 86 posts · 29 votes
Hey everyone , my name is Andy . I live in NYC , Queens
I was looking into rental properties but I was looking at Florida properties. I was just wondering , how do you guys feel about buying a rental property in another state and having a property management company handling your day to day activities. Also how do I know if I can trust a property management company? And if anyone lives in flordia that can point me to a great management company and some good rental properties that would be great .
@Andy Ramdeen If you are wanting to buy from the same company that manages the property - and I assume not be doing any rehab work since you are at a distance and don't have contacts - then you're looking at turnkey, my friend. One company does everything - finds properties, rehabs them, updates things like roofing and HVACs etc, sells to investors, finds tenants, and manages the property long-term.
If that sounds like the type of investment you are looking for, then you should start looking into turnkey companies in Orlando if that's the market you want to invest in. Make sure they are full-service - meaning they actually do everything in-house, rather than selling you a property and then passing you off to a 3rd party management company you didn't vet.
Turnkey is a popular investment for folks who are priced out of their own market (like NY), but you need to do the legwork to ensure you go with a quality outfit. I agree with others here who have said it's a good idea to fly out to Orlando. Once you have an idea of who you want to work with (vetted and narrowed down to one or two providers) fly out and meet them, take a look at their inventory, drive around those neighborhoods at night, etc. It's an investment in your investment that will pay off big time in peace of mind, and it's still the best way to suss out scammers and 'too good to be true' claims.
A few other tips for investing in turnkey:
Good luck!
@Andy Ramdeen big advocate of OOS. And using professional management regardless of location.
You've gotta vet em, and I'd strongly recommend seeking out referrals. If it's a referral from someone on BP you don't know much of, i would make sure you're getting multiple people referring a specific manager. A good one will be worth the 8-10%, and SHOULD be able to do better than you would if you were personally managing through the advantages they have due to expertise and economies of scale.
Spend your efforts investigating turn time, vacancy rate, and maintenance costs with each management company.
@Andy Ramdeen not to worry, getting started in REI is always a steep learning curve. As a turnkey provider, I try not to be too heavy handed with recommending that investment type, because it isn't for everyone. In your case, however, it sounds like a one-stop-shop is what you're looking for.
Talk to several investors who are local to the area. You can make some here on BP, and you could also look into taking a flight down, to meet with realtors, fellow investors, property managers, and so on. Ask for recommendations, take time to get to know people, and so on. David Greene, who co-hosts the BP podcast, wrote a great book about this - he lives in CA and invests in FL actually. I recently started investing out of state, and have found that getting to know people, and building trust, takes time, but is 100% worth it.
@Jeremy Marek the reason why I choose out of state is because it’s way cheaper , NYC is too expensive for me right now to invest in anything
@Elliott Elkhoury I will , I plan to take my time and learn everything because in the end it’s my money at stake . Thank you
@Andy Ramdeen Hi, I think it can work if you get a management company you can trust to get it done. I don't use any management company so idk how the vetting process goes but in anticipation of my scaleing up to a larger portfolio I have been compiling questions to ask them when I do turn my stuff over and I have 2 pages worth lol. I do own a couple units out of state. What I did was find me a partner that handles all the management, leasing and maintenance. I feel I can control the investment better since I manage my Ohio stuff and my partner can implement the same processes and procedures in the out of state investments.
@Andy Ramdeen After buying in the right area, having good property management is the next most critical requirement when buying out of state. It always makes me wonder why people are so concerned about turning the management over to a 3rd party yet think nothing of having a fund manager that they don't know and have never talked to manage their 401K retirement accounts. I would trust my assets to a good, well vetted and reputable PM more than some random funds manager. What are your investment goals and what has led you to look at Florida?
@Andy Ramdeen I'd recommend you do your first deal locally in your area. That way you can build your systems and learn the ropes before investing out of state. Not to say you can't go straight for out of state, but it is always easier to network and learn when it's close to home
Jeremy, he lives in NY City which is prohibitively expensive and doesn't cash flow. That's the whole reason people look out of state.
@Andy Ramdeen I have a group of customers from NY who I have never met in person. They purchase rentals properties in north pinellas of which I represent them on the buyer side throughout the transaction scheduling appointments sending them all intel and comps. My brokerage manages their properties for a very small fee w maintenance staff “limited small” repairs included. Our property management team has been around for over 20 yrs w almost 500 units in our portfolio. We have owners not only nation wide but also globally ranging as far as Ireland, England and Australia. I would highly recommend researching this short term tourist and long term residential haven.
North Pinellas County Florida- Tarpon Springs Dunedin Clearwater Beach Palm Harbor Oldsmar. You can’t miss here. Some units generate as much as $60k-$80k annually selling under a half million minutes away from top rated beaches in the nation.
@Andy Ramdeen I am just starting out as well. I currently live in CA and I have one SFR in Florida and one under contract in MI. If you do decide to go straight to the out of state strategy, find something that gives you a leg up in the market that you choose. For me, I lived in FL when I bought that house (and house hacked for over a year while I lived there) and my in-laws live in the town in MI where we got our second one. It is definitely an advantage to have someone who intimately knows the market helping steer you out of the not so savory areas. However, that is not to negate the fact that an extremely solid investor friendly agent can help with that too.
It comes down to having a solid, trustworthy team in place. For me, it was my agent, father in law (additional boots on the ground) and property management company. Since each do investments themselves the could point me to contractors in the area, and good title companies/lawyers to round out the team.
Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other secondary or tertiary markets.