Investor · Boston, MA · Member since 2018 · 7 posts · 3 votes
I recently have an opportunity to purchase 3 multi family units out of state (Maine). I currently reside outside of Boston. The numbers create a nice monthly cash flow even with property manage. I feel I have reviewed every possible pro/con but you don’t know what you don’t know. Any one have any experiences, good or bad, to share?
You can find some very nice deals in other states but have to consider how well they will be managed. The most important part is screening for a good property manager.
You can start by going to www.narpm.org and search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance or problem tenants. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
I hope this basic guide helps. If you have specific questions about property management, I'll be happy to help!
We have not entered the multifamily units yet but am very interested in learning the details. Do you have someone as boots on the ground in Maine or are you going at this solo? Are you familiar with the area in Maine or how did you find this opportunity? What is your experience with multifamily properties prior to this one?
A good place to start, and I may be a bit biased, would be to have the property(ies) professiknally inspected. I am not sure what part of the state you are looking at, but my company, Maine Inspection LLC services from Saco/Biddeford north to Waterville/Winslow area. As a fellow investor, my company is very in-tune with what issues are most important to investors and we work closely with many local, as well as out-of-state investors. Please reach out if we can help in any way!
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