Looking to get my first out of state property and potentially manage myself. What kind of setups fo you have with your contractors that take you mostly out of the picture. For example, the tenant calls the contractor and the contractor takes the work that way. something similar or streamlined?
@Matt McCurry I know some owners that leave a list of contractors with their tenant: plumber, electrician, handyman. Sometimes it works and sometimes it doesn't. You would have to have an honest tenant and trusted vendors.
How will you monitor the market to ensure you're at market rates? Handle showings? Move-in and move-out inspections? Drive-by inspections? Post notices? Track vendors to ensure work is done correctly?
You may find you are stepping over dollars to pick up dimes. A good property manager will cost you around 10% of your income. One bad tenant can cost you 5x that amount, not to mention all the stress that goes along with it.
Remember: cheaper doesn't mean you'll make more money.
You can start by going to www.narpm.org to 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. Regardless of how you find them, try to interview at least three managers
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, late rent, evictions, turnover, etc. 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.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
Hi @Matt McCurry ,
I just started "self"-managing an out-of-state property. I use the quotes around self because it obviously takes a team when you are managing from a distance. I don't have enough experience to give you any sort of track record for this system, but here is what I put in place:
1. I personally take all of the calls/messages from the tenants, and then pass that information on to my contractor. I know that this adds one more layer to the system, but I want to stay on top of what is happening at my property, and this is one way to do that.
2. I have one main contractor that can handle 80%+ of any possible work that needs to be done. In my case, this happens to be my uncle, so I trust my life with him. I know this doesn't necessarily help you, but I mention it because I think you need to built a decent level of trust with at least one contractor. If you are buying a property somewhere, you must know a few people in that market. Ask them who they know that does that type of work and get a few references. In my opinion, it helps to have a point man who can be your eyes and ears and manage other contractors that do work. Pay this person generously.
3. As @Nathan G. said, having a list of specialized contractors (plumber, electrician, etc.) is helpful so that when there is an issue, you can contact them quickly.
4. I haven't had any tenant turnover yet, but I've been talking to a younger, hungry RE agent in my market about handling my listings. If I can get him to do my showing process for 50% of one month's rent, I think it will be a mutually beneficial deal.
All this being said, I agree with @Nathan G. on his advice. Managing from a distance can be difficult. A good property manager is worth the cost and a deal that is too thin to afford property management isn't a great deal. I am trying this system of self management because I am investing in my hometown, and thinking of building this system over time. I'm not doing it to save money, as much as I am doing it because there isn't a great property management option in my market. Good luck with whatever you decide!
One other thing I forgot to mention:
A lock box for keys that contractors can access in an emergency is helpful. I know that there are some electronic ones that you can see a record of who entered it, change the password, etc. on your phone. I am personally using a basic mechanical one as of now. Just make sure that you manage access and change the password when appropriate. I don't have a full system worked out around this yet.