I have a property owned by a family member that is a 2% property. Triplex. Fully renovated and rented. Each unit rents at 525.
I know all the other numbers and it would be a great addition to my portfolio. Family built the building and have owned it for 30 years. But it's 50 minutes away. What do you guys think?
An hour drive is the most I would want to do...
Is there a lot of deferred matenence on the place? When I hear someone have owned a place for 30 years I think of differed matenence and undervalued rent.
Mine are in a two hundred mile spread. I'm in the middle they go 100 miles each way. I Take weekend rides on my motorcycle for inspections. Needed maintenance is scheduled on a return trip. Gives me a chance to clear my mind. And of course listen to Bigger Pockets blogs.
Ask @Elizabeth Colegrove. She self manages across the country I believe. So 50 minutes is nothing. It's not like you'll be driving there every week.
I live in L.A. and self management my properties in Houston. You can self management from here to the sun once you assemble a ground team.
@Ryan Dossey , mine are 6 miles from my house and I self manage. For me, I like driving by once or twice a week just to "keep an eye on them". However, once you establish a solid team of people you can trust (that in itself can be more difficult than managing tenants IMO) it doesn't matter if they are 6 or 60 miles away. Best of luck!
My front door. I'm a REI...not a house babysitter. The money I spend on my PM gives me my time back. My time is more valuable. My time is who/what I am in regards to REI. If I was wasting my time self managing, I would not be doing what I'm supposed to be doing with my time:
Adding to my Network
Adding to my team
Adding to my Lists (buyer, seller, funding, tenant, partner, etc...
...and the list goes on.
I have one that's about 45 minute drive. A couple of caveats:
a. It is in a small town. Folks are simple and down to Earth. It's in a desirable location, and whenever I get vacancies, they tend to rent quickly. This thing is easy to manage...
b. There is a shooting range I like in that town, as well as some shopping. So - whenever I go, it's a multi-purpose trip. I go throw some led down range, shop, and pick up rents...or something like that :)
For me it works, but I don't think I'd buy another one that far, unless it were large enough to support pay roll.
@Ryan D. - sounds like a great opportunity. How has the unit been for your family - are there any problems to consider that would require frequent visits? As for the distance, our farthest house is 50 miles away, which in the DFW traffic can be 45-60+ minutes, but we are very happy with it, we do self-manage, and I would buy in that area again since we already have one there. Like Ben, we typically combine trips to the property with other recreational activities in the area.
I would do it @Ryan Dossey have a couple of duplexes with those numbers and stable tenants and they have been great, no need to go there much. Although, mine are about 12 miles away but would consider a deal 50 miles away if it was good enough.
I would say It depends on you and what work you will be doing yourself.
- showing to potential tenants
- drive by inspections
- inside inspections (I change furnace filters, and inspect under sinks)
- regular maintenance / upkeep
- Turn overs / cleaning painting
I am not a big operation and never will be, so I do most things myself. I like to be able to jump in car and be there in 5min. I can even run back home for lunch and get a tool or part if need be, but ultimately you must be the one to decide is it worth a 2hr round trip.
Good luck with whichever decision you make.
I have self managed A class rentals in Madison MS, although these were new construction that I paid 180 to 225 for each home I bought 12 of them for GOZONE tax benefits. a few of my tenants have been their now for the entire time I owened the home 7 plus years.. Although I am now retiring from land lording and selling them off.
I would never consider land lording without PM with any asset that was less than A quality and A quality tenants.. IE rents are 1500 and above you get first last and security so it takes 4500 to get into a house.. and they are making 60k plus a year.. one of my subdivision were I bought 4 homes is right next to the top end development in the state and so I have gotten Doctors and other high end professionals to rent for 12 to 24 months while they build their 2 million dollar dream homes.. Homes in these areas when vacant are rented in 1 to 2 weeks.. I use a local agent who takes 1/2 months rent for placement then I take it from there..
But if you have your average 500 to 700 dollar renter I would only have PM for those.
To me, it all depends how hands off you could be. If you don't have an older building that wont have much maintenance then it might be ok. Also, it depends if your tenants are good, pay on time, communicate well with you... all in the intangibles.
My rental is in the beach area, so I actually enjoy driving and spending time there.
Thank you guys all VERY much for the thoughts and tips. I need to check in and see if their is a PM company that works in the area. It is in a more country area so I need to see who works that way. My wife's grandparents own it. They get stressed out anytime something comes up. For them a tenant moving out is an ordeal. I'm going to tour the property and talk to them about the condition of the property. My wife is supportive of it.
I self manage from across the country, while it has its moments and extra expenses it has been successful.
@Elizabeth Colegrove how do you manage vacancies and showings? Do you generally try to find a local agent that you continue to use year after year? I am looking into self managing from one state away (Iowa to Minnesota) and feel completely comfortable handling repairs and the like but do not know what the best is for showing properties when there is a vacancy.
@Jedd Braunwarth it won't let me pm you from my phone but if you look at the link in my signature you can find a lot of articles where I indepth discuss or strategy and process.
The short story is we have done very well investing in a higher class of property that allows us to rely more on our tenants. Our tenants are gracious enough to show our house for us. They also let in repair man we just organize it.
I've done 35 minutes. I would consider up to an hour, but I'd really like to keep it a little less. Unless I get a vacation rental, but that's just a distant idea at this point.
The military has transferred me to multiple states. I'm literally on the opposite side of the country. Two of my properties have HOAs but my son is helping me manage them. He's 19 and welcomes just about any challenge that comes to him. I pay him about half of what a professional would cost because I help with everything. So for now, those are doing well.
I have another house which is section 8. The renter has good communication with me but the section 8 program actually performs in-house visits to ensure everything is well. Not bad! In fact I want more section 8 homes because it's been so great! This house is not managed by anyone but I do find myself in that area so I'm able to visit the home occasionally.
I also have a duplex which I purchased at my last assignment. My coworker and friend is helping me manage it. I pay a reduced price but I'm also very involved in the process. With a recent terrible experience, my friend stepped in to clean the mess. So I was grateful he was there... he performed far beyond what a professional would do.
At times, I wonder if I am making the wrong decision by not having professional management. It's also possible to have pay a lot of money and not be satisfied with a management company... so I think I'm doing pretty well.
If I lived within an hour of my house, I would certainly manage it myself. There's no replacement for self management.
My wife and I own a house in San Diego, Ca and we live about 145 miles away from it. We self manage this property but my Dad used to fix anything that needed fixing. My renter is with section 8 so collecting rent is not a problem. She has been there for 4 years now.
I have 2 rentals within 10 miles distance. I can normally get there around 10-15 mins with some local roads. It has been working out for me and i normally go there at night (after work) and on weekends. I have another one about 15 miles away (30 mins drive) and I have a Property manager (PM) in place. I consider this a little bit too far to manage myself with the expense of gas and tolls. I can manage it if i really want to but i want to try have a PM takes care of it. I learned a lot by managing the PM and hopefully this skills will be helpful when i need to hire someone for a larger property in the future.
When I started I figured anywhere in the Twin Cities metro would be ok. I ended up with one 39.2 miles away taking about 50 minutes to get to. I had it for a number of years, but recently sold it closing on it last week. For me, that's too far. I'm looking to stay within about 20 miles from home.
I'd look at some of what others have said and asked on this post then answer those questions for yourself to make a decision. Since it's a family property you should have plenty of insider knowledge to how renters are, condition of the property and maintenance needs. Personally I would manage it myself unless you have an overwhelming amount of other properties you already are dealing with. Sounds like a good one to have. Remember you can manage it without having to do any of the physical repaire work. Just find a good handyman and pay him to go fix whatever whenever when a tenant calls you. Don't think you really need a property management company for this. Like many have already said it's not all that far and you won't be there all the time.
As @Jay Hinrichs says, it depends on the class of tenant. I have one Bay Area home about 50 miles away. But that rents for > $3000/month. Payment is automatic deposit and I have had one call in 6 months to fix a garbage disposal. I dispatched my plumber and that was that. Its close enough to show (I would probably just use the open house method rather than appointment). I have no need to "drive by" and look at it. What would I see anyway? Plus its in a town house development and was my former residence so I know the neighbors and they would tell me if anything was seriously amiss. BUt even without that, I would be okay with any home in the Bay Area that would rent at those levels because I get professional class tenants. Now I own a bunch of midwest properties at $750/month which I would never self manage even if they were across the street from me. I just don't want to personally deal with that tenant class. So I have a good PM and let him handle it all. And I would do that if the properties were 2 miles or 2000 miles away.
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