Out of state investing - Advice needed.

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

3mo

Having a team is priority. The property manager, contractor, lender, and local boots on the ground are vital.

I'd use property management. Could you self-manage? Probably. But it may be a head ache and hard to manage out the gate. Most managers in my markets are somewhere around 8-10% of collected rent, plus leasing fees.

As far as repairs and emergencies, that's where having a good manager comes in. If you self manage you need a reliable handyman/contractor to jump on those ASAP.

The biggest mistake I see new out of state investors make is chasing the highest cash-flowing property without understanding what kind of area it is, neighborhood, taxes, insurance costs, vacancy, turnovers, etc. Sometimes a property looks amazing on paper for a reason.

When looking at a market, look at:

• Population and job growth
• Diverse employment
• Landlord-friendly regulations
• Long term price trajectory
• Supply of homes for sale/rentals

As for visits, I would visit the area and property initially. Also interview your team members then only visit as needed. A well run property shouldn't require frequent travel.

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Travis Main

Lender · Orlando, FL · Member since 2023 · 220 posts · 183 votes

3mo

Hey Beau,

I don't personally own rentals out of state, but I work with a lot of investors who do as I am a lender, and the biggest thing I've learned from them is that your property manager can make or break your experience. Most of the successful investors I talk to use professional management, especially when they're several states away. The management fees I've seen are typically around 8-10% of collected rent, plus a leasing fee when they place a new tenant. Some also charge coordination fees for larger repairs, so it's important to understand their fee structure upfront.

The investors who seem to have the fewest headaches focus heavily on building a local team before they buy. That means having a reliable property manager, contractor, handyman, and agent in place from day one. A lot of people get attracted to markets because the numbers look great on paper, but they don't spend enough time vetting the people who will actually be managing the asset. The most common mistake I hear about is buying in a market before understanding the neighborhood, tenant base, and local regulations.

From a financial standpoint, many of them say it's been absolutely worth it because investing in their home state simply didn't provide the same cash flow. The tradeoff is that you have to trust your systems and your team. If you can get comfortable managing by reports, photos, and phone calls rather than being able to drive by the property whenever you want, out-of-state investing can be a great way to scale.

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Samuel DioufBusiness Member

Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes

3mo

As of now, about 90% of my clients are OOS.

I would focus on growing relationships and building your core 4. Having a team in place is essential to long-distance investing. The core 4 consists of a realtor, contractor, property manager, and a lender. Once you have this team in place, you should have the foundation to invest in any market confidently while not being there physically.

Starting with a skilled agent should be your main focus, as they'll be able to connect you with every contact you need.

[email protected]614-662-1652

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Arman AhmedPro Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 911 votes

3mo

Quote from @Beau Fields:

I'm looking for advice from experienced investors who own and manage single-family rentals in states where they don't live.

I currently live in Washington State and am considering purchasing rental properties in Alabama. The numbers look attractive, but I want to better understand the realities of owning property that is thousands of miles away.

A few questions for those who have successfully done this:

Do you self-manage or use a property management company?
If you use a property manager, what do they charge (percentage of rent, leasing fees, maintenance markups, etc.)?
How do you handle repairs, turnovers, and emergencies?
What systems or software have been most helpful?
How often do you visit your properties?
What mistakes did you make early on that you'd avoid today?
Has long-distance investing been worth it for you financially and personally?

I'd also appreciate recommendations for reputable property management companies, especially if anyone has experience investing in Alabama.

My goal is to build a portfolio of cash-flowing SFRs, but I want to understand the operational side before pulling the trigger on my first out-of-state purchase.

Thanks in advance for sharing your experience and lessons learned.

Out-of-state investing really comes down to one thing: your team, not the distance. Most investors I know don’t self-manage, they rely on a property manager and treat them like the “operator” of the asset. Typical PMs charge around a management fee plus leasing fees, but the real value is in how they handle maintenance, tenants, and communication. Repairs and emergencies are usually routed through the PM with pre-approved limits, so you’re not involved in every small issue. The biggest early mistake is buying first and then trying to build a team, backwards almost always creates headaches. Whether it’s Alabama or Midwest markets, success comes from locking in a solid PM, contractor, and agent network before you close. Once that’s in place, you don’t need to be local for it to run smoothly.

[email protected]614-418-6081

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

3mo

Quote from @Beau Fields:

I'm looking for advice from experienced investors who own and manage single-family rentals in states where they don't live.

I currently live in Washington State and am considering purchasing rental properties in Alabama. The numbers look attractive, but I want to better understand the realities of owning property that is thousands of miles away.

A few questions for those who have successfully done this:

Do you self-manage or use a property management company?
If you use a property manager, what do they charge (percentage of rent, leasing fees, maintenance markups, etc.)?
How do you handle repairs, turnovers, and emergencies?
What systems or software have been most helpful?
How often do you visit your properties?
What mistakes did you make early on that you'd avoid today?
Has long-distance investing been worth it for you financially and personally?

I'd also appreciate recommendations for reputable property management companies, especially if anyone has experience investing in Alabama.

My goal is to build a portfolio of cash-flowing SFRs, but I want to understand the operational side before pulling the trigger on my first out-of-state purchase.

Thanks in advance for sharing your experience and lessons learned.

You can try DIY managing, but if you have no experience you're up against a "system" designed to make money off you - with a high percentage of incompetent players and and equal amount that are looking to take advantage of you.

So, less than 35% of those you encounter will know what they are doing and will actually be looking out for your best interests!

If you decide to hire a PMC, please read copy & paste info below:

-----------------------------------------------------------------------------------------------------

We’re a Property Management Company (PMC) in Metro Detroit ONLY, with 25+ years of experience, and we’ve seen owners make the same mistakes, over & over again when looking to hire a PMC – which drives us nuts!.

In our experience, the #1 mistake owners make is ASSUMING all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY.

So, owners mistakenly think price is the only differentiator – and look for a PMC like they’d shop for groceries☹

We encourage you to learn from the mistakes of others by reading posts here on BiggerPockets from owners that picked a PMC solely by price and regretted it.

We recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Even if someone gives you a referral, do NOT make the mistake of assuming that just because a PMC met their expectations, they’ll meet your expectations. We all have our own expectations and what works for someone else, may not work for you.

If you’re new to all of this, it's often a case of not doing enough research, as you don't know what you don't know!

So, ask more questions!

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Here’s some articles we’ve contributed to BiggerPockets about screening a PMC BETTER than you would a tenant!

20 Questions to Ask When Vetting a Property Management Company: Processes

13 Questions to Ask to a PMC: Communication and Documentation

24 Questions to Ask When Evaluating a Property Management Contract

[email protected]248-209-6824

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Alfath AhmedBusiness Member

Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes

3mo

Quote from @Beau Fields:

I'm looking for advice from experienced investors who own and manage single-family rentals in states where they don't live.

I currently live in Washington State and am considering purchasing rental properties in Alabama. The numbers look attractive, but I want to better understand the realities of owning property that is thousands of miles away.

A few questions for those who have successfully done this:

Do you self-manage or use a property management company?
If you use a property manager, what do they charge (percentage of rent, leasing fees, maintenance markups, etc.)?
How do you handle repairs, turnovers, and emergencies?
What systems or software have been most helpful?
How often do you visit your properties?
What mistakes did you make early on that you'd avoid today?
Has long-distance investing been worth it for you financially and personally?

I'd also appreciate recommendations for reputable property management companies, especially if anyone has experience investing in Alabama.

My goal is to build a portfolio of cash-flowing SFRs, but I want to understand the operational side before pulling the trigger on my first out-of-state purchase.

Thanks in advance for sharing your experience and lessons learned.

I work with a lot of of OOS investors and own 30+ rental units in my market. Most oos investors perform well when they establish a team. You need to find a good agent that can connect you with a good property managers that can lease/manage, get a good contractor that can make repairs, and find a good lender(s), that can finance conventional, dscr, or hard money where you need (better to have local lenders).

1. use a pm

2. typically they charge 10% gross rents and charge 1st months rent to lease

3. contractors/handymen

4. buildium if you self manage, make an excel sheet to track PITI, insurance, repairs ( i can share mine with you).

5. have pm do walkthrough prior to leasing or after renovating.

6. get inspection alongside sewer and talk to your realtor on age of mechanicals

7. yes do the brrrr method to scale in fast growing midwest market and re-invest in another city that is heavier on cashflow. buy offmarket deals.

[email protected]614-802-5698

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Out of state investing - Advice needed.

Out of state investing - Advice needed.

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