I’m looking to purchase a rental property out of state and have it professionally managed. I have been doing research and reading books about rental property at a distance. My question is, How would a person gauge the market in a specific town?
I have talked to a hand full of property management companies and they say that most of their rentals rent out quickly, less than a month. But their word aside, how would I find out for myself?
@Travis P. You can always check the markets on zillow but the most affective way is to speak with agents and build those relationships. They can not only help you find the property but can run numbers on rentals or resale. You should never use your opinion alone. I have been in this business for 15 years and still look to see what others think.
Hope that helps,
@Travis P. 1st off STOP READING BOOKS, !!! Simply go online. tons of info, and speak with a local investors. Its really not that difficult. It took me about 2 hours or less to determine my market, since then I have done 100s and 100s and 100s of deals,
PS make sure you are cash otherwise, MUCH more difficult to find good deals
Work with an agent in the area. I work with investors in Austin and San Antonio TX. A lot of agents specialize in residential real estate but many fear or are not knowledgeable and/or simply don’t have interest for the investment side of real estate.
Nothing wrong with that, but I say this so you can find a solid agent that understands the mentality and end-goal of investors. When you find one that really understands, they make this process super easy.
The biggest challenge at that point is outbidding the competition if it’s a publicly listed property in mls. In addition though, investor agents like myself also have a diverse network with other agents and investors for off-market properties.
You can do it without an agent too of course but it’s definitely harder without knowing the area. Comps Will show you just about everything you need to see, you just plug those numbers into your formulas.
Hope this helps!
It will come down to quality of asset in the beginning then of course PM will make or break your investment.. that is if you buying class B or lower... I have quite a few class A's that I can self manage even from the west coast.. I just use a broker to place tenant then handle it form there just need a really good handy man and your set.. defiantly cannot do that on B and lower though
Great question @Travis P. and Great advise so far! I've started reaching to some agents. Thanks everyone.
Rule #1: NEVER TRUST ANYONE!
If you're not going to personally see the property, then you'll be reliant on others and they may be crooks or at best, just not have the same goals as you.
So, you'll want to form a Tripod Team: Agent, Lender & Property Management Company (PMC).
Agents & lenders are transaction based, so few of them will really "be there" for you if something goes wrong after a sale. The PMC you hire will have to deal with whatever you buy until you sell it or you part ways. So, you may want to get them involved on any purchase ASAP, for their feedback before you sign a purchase contract.
Regarding selecting a PMC, they can make or break your investments! When a property owner first contacts us and their initial question is "how much do you charge?", it's a sign they have no clue what they are doing. If they knew what they were doing, their intial questions would be about the services offered and systems in place to deliver those services consistently!
We recommend you read our series here on BP: How to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes
If you focus on putting together a good team and can get them working together, you dramatically increase your chances of investing out of state successfully.