Hi there folks-
I'm looking to make my proverbial first investment and from listening to the podcast and reading some of the seasoned investor posts, it looks like multi family is the way I want to go. The only problem is that I reside in Chicafo- a market where a good majority of the steals are gone (my budget is ideally paying no more than 120K for a four plex).
I wanted to go to other areas of the country - Winston Salem is appealing, but I'm not sure how many problems that will create with property management. Ultimately I have no desire to be involved in anything but cutting checks and I'll happily give 6% of my Gross Revenue to a property manager.
Is buying out of state on a multi family with a fully outsourced property management approach a bad idea?
6% seems low. i thought they keep at least 8-9% if you give them multiple properties.
@Brie Schmidt is super involved in that area, so she can help u.
Property managers take about 10% of gross rents. Your issue is going to be that you will only have 1 property with the PM so you are the low man on the totem pole. I buy properties all the time from out of state investors who are failing and the #1 reason is they are not a priority to their PM.
there are opportunities in Chicago on the south side that more than fit your criteria. If you can avoid following stereotypes , hire quality PM, you can meet your investment goal !
""Ultimately I have no desire to be involved in anything but cutting checks and I'll happily give 6% of my Gross Revenue to a property manager ""
If you are only giving a PM 6% you will be doing a lot more than cutting checks.........better add...mowing lawns...painting fences...changing light bulbs...serving notices...and so on and so on.....
Hop over the border to Indiana. Theres some pretttyyyy good stuff out there. Chicago's best kept secret- everyone who lives in Chi hates Indiana lol.
I agree with @George P. , I just negotiated my preferred property manager down to 8% on every investor/property I send him but was only able to do that due to the amount of business I send him. He does good work on the hundreds I send him so his original 10% wasn't unreasonable in my eyes at all.
@Saad Handoo , it's not a bad idea. There are many people doing it. You'll need to do your research and talk to local pros and other investors. And @Elliott Elkhoury has a good idea with Indiana. I'm hearing good things about it as well. You might chat with @Mike D'Arrigo . He knows quite a bit about it and he seems willing to share.
As for property management, I'm seeing 10% as a norm, with slightly lower rates available to those with multiple properties or larger complexes. You really want your PM to be your eyes, ears and hands. So, when you find a good one, it makes sense to pay them appropriately and treat them well. Just consider it a cost of doing business and factor it into your calculations. As you look into different areas, you might find someone like @Alyssa Dyer who's already negotiated a discounted rate for management. Just do your research and always ask for and call references. That's one of the best ways to mitigate some of the risk, no matter who you're hiring.
@Matt J. Mr @Mike D'Arrigo and I both operate in very different markets of Indiana. Each with pros and cons I'm sure & naturally I'm partial to the one which I've selected- the proximity to Chicago has driven Chicago-esque rental prices, which are a quite bit higher than Indiana's.. but you still get Indiana prices, laws, and taxes. Interesting little phenomenon.
Good PM is so so so key. A good manager allows you to operate in working class neighborhoods that offer higher cash flow, but you can't just use any property manager in some of these more difficult neighborhoods- some just aren't cut out for areas where you actually have to work to pick good tenants and keep them.
In alot of stories a property manager can make or break a investment. If you can't rely on a good PM to be your trusted eyes and ears then be prepared to be an employee in your own business. Pay for peace of mind.