Managing out of state multifamily units

3 Replies

I am considering, finally, selling one of my single family homes which has been sitting empty for three months between tenants.  Whenever there is a vacancy with one of my houses it is a devastating financial blow and recently I had two that were sitting empty for several months.  Now seems like a good opportunity to sell the one that is still empty and attempt to find a multifamily that I can afford. That would have to be out of state because Portland and all the surrounding cities are just too expensive.  

I've done some searching and have found duplexes, triplexes and fourplexes for a good price in other states.  Of course shopping in another city I know nothing about is like shopping in dreamland. I don't know the areas so they could be pretty undesirable so this would require more time researching and traveling getting to know the market.

What mystifies me though is how people manage property from afar.  I had two property managers in Portland trying to "manage" just one of my homes.  They were a dreadful disappointment who moved terrible tenants in and who's workers damage my home.  After the second try I just moved here and started doing it myself.  

How do you people with the multiplexes find reliable on site managers or companies to take over? What is an onsite managers incentive to show and rent an apartment when the owner is no where around to oversee them?  Do they get a percentage or bonus for each apartment rented?  I have a lot of questions and I'd love to hear both successes and horror stories so I can make a solid decision whether this move is for me. 

Thanks

Kathryn in Portland

Good insight Kathryn.  The typical PM is motivated to fill vacancies - - period - - and that's a real problem which you have already discovered for yourself.

Contracts for PMs are written to their benefit and typically there's tons of 'extra fees', like move-out, move-in, cleaning and even showing, so read all the fine print. I would write my own, but there's a proverbial snowballs chance they would go for it :sigh:

PM is an 8-10% gross rents business - - but what do you get for that?  Usually just collection of rents.  Here's a list of issues to discuss regarding rental management:

  • is your commission based on total rents at 100% occupancy or on rents collected?
  • how do you account for rents and expenses and when?
  • what's your arrangement to make deposits to my account - - can you auto-credit every month?
  • who pays for advertising, cleaning?
  • how often do you perform inspections and do you charge me for them?
  • do you handle the evictions and at what cost?
  • do you charge me for renewing an existing lease?
  • how do you manage tenant maintenance requests AND how soon can the tenant expect a repair man to show up?
  • which tradesmen are on staff or on call {plumber, roofer, electrician, handyman}?
  • I want to use Purchase Orders for maintenance exceeding $xxx per repair - - can to support that?

A full service PM would offer a service (for a fee) to pay the property taxes when due.

Your first problem is choosing a locale, then I would get a COMMERCIAL Agent onboard to guide you.  He/She would have contacts for PMs that could be trusted.

Lastly, your eyeballs can not be replaced by email or texting - - schedule time for an onsite visit and interview the Agent, PM prospects and to see some candidate properties.


Wow, thanks for a very thorough response.  My experience so far has been very negative so I'm hoping there actually are reliable and trustworthy PM's out there.  This list of what to ask is very helpful.  Thanks again,

Kathryn 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here