Property manager first?

Question

Hi everyone,

New to this forum but extremely ambitious to begin in the real estate investing world!

Below is the process flow I am thinking about please let me know if I am missing something or completely wrong.

I am seeking to buy a single family or multi family home. Target market is the greater Cleveland area.

I want to buy and rent out the home, however living in NY. I would want a property manager to handle the rent collection, and management of the property.

Would my first step be to identify market (Cleveland) find a property then before closing enlist a property manager?

Guess to clarify more, is it possible to make a connection and have a property manager lined up before closing?

Frank Geiger · Answer

@Ali Musliwala welcome to BP! Identifying the market you want to invest in is the perfect first step. I suggest writing down your strategy. You will want to reference it when running the numbers. I am a systems guy so next I would focus on lead generation. The more deals you have blowing up your inbox the better. Don't wait to find a PM. You should be networking with the rockstar investors. Don't waste your time calling duds.

James Wise · Answer

Welcome to the site Ali. Ideally the person who is working with you to find the property will also be the person working for the management company. Sales of rental properties is totally different than residential real estate so make sure you're working with an agent who understands rental properties. Those dudes typically work for companies that also do Property Management.

As for the Cleveland market itself those are my stomping grounds. I wrote The Ultimate Guide to Grading Cleveland Neighborhoods for investors like you who are new to the market. Give it a look through. Should help you determine the neighborhoods you are & are not interested in.

Account Closed · Answer

Yes. For sure PM first. Without a good PM your great deal can turn into your biggest disaster. PMs are also the best resource to tell you what kind of rent you can realistically expect, what type of tenants live in what areas, what the value of the property really is. However, good PMs are pretty busy so getting one to spend time with you may be hard especially if you are only buying one property. If you have a plan to build a portfolio you may have better luck. Also PMS are also a source of properties. Many times they have owners who want to sell their properties so you could ask as a buyer also.

Ali Musliwala · Answer

@Subbie Kaur

Thanks Subbie really appreciate it!

Subbie Kaur · Answer

Hey Ali,

Welcome to the forum!

You should look into property managers in the area as you are finding the deal. Matter of fact a good property member should be able to tell you more about the market, and answer any questions and concerns you have before getting in contract with them. It is very much possible to make a connection and have a property manager lined, I would highly recommend this so you can have a smooth transition as soon as you close on any property.

Good luck!

Ali Musliwala · Answer

Thanks Ray! Yeah PMCo that leans more in favour of home owner is key. I will keep what you said in mind! As for Cleveland, market prices for homes are cheap, thus mortgages are pretty low, and rentals on them tend to be higher than the mortgage. It's what intrigued me about the market.

Ali Musliwala · Answer

Thanks James you really laid out great framework I really appreciate the link. And great job!

Ali Musliwala · Answer

That makes lots of sense having the agent and the PM being different gives an extra sense of checks and balances. This way the PM is interested in "your" best interests as those align more or less with his as rent collection is main source of income for both the PM and me as the investor. If the PM were the same as the agent like you mentioned there is potential for conflict of interest.

Sammy Lyon · Answer

@Ali Musliwala if you’re following David Greene’s advice on out of state investing you’d actually want your agent and property manager to be different, in order to facilitate checks and balances. Probably the most important factor in an agent is that they are investors themselves — or that they work with investors — and that you are building a long-term relationship rather than a one-and-done deal. If you agent is advising you well, you are more likely to keep working with them over time.

I personally spoke to several property management companies before finding a deal, and when a deal came my way they could give me (relatively) unbiased rental comps for me to run my numbers with. I felt comfortable handing over my property after closing because of building that relationship beforehand. I by no means think every agent would do this, BUT if your agent is going to manage your property there may be incentive to downplay some of the issues with the house because they’ll recoup it on maintenance expenses when managing. However, most PMs have a brokerage and the other way around because of property management laws, and in order for a business to scale it makes sense to have both. It just comes down to relationships and trust, I think, at the end of the day. And doing your homework.

Happy to chat more and congrats on getting started!

Ali Boone · Answer

Normally I always say you kind of have to know where the property will be so you can let a PM know so they can tell you whether they service that area or not. But if you are just generally focused on Cleveland, it might be good to find a good PM ahead of time because then you can know you'll end up with a good PM and they might be able to help you better choose a property to invest in. I assume at that point they'd need to be an agent so they can be your agent, so they get paid for their time on that end, but most PMs I've worked with (granted I prefer individual PMs over bigger PM companies) have been licensed agents who could sell a property. So that might be the trick- say "hey I'm looking to connect with a PM so I can be set up once I purchase a property but in support of that, it'd be great if that PM is an agent who can help me identify a good property". It becomes a two-fer!

Property manager first?

Most Popular Reply