how to find the right property manager for managing your property in another county.

Question

I live in los angeles and have seen lots of videos on multi unit investing. But here in L.A., you've got to have deep pockets to put down a large lump just to break even as far as cashflow is concerned. My biggest concern is if i buy out of county or state multi-family prop, to get better cash flow, how do i keep from getting ripped off by the property management company i hire to manage property? They know i live out of state/county and could practically make up phony invoices for work that never happened. With no one to check their hand, how does one protect their investment in this situation? Any help would be appreciated. I have 2 properties now in La area but looking for better cash flow and less fraud in other areas not so expensive.

Larry Davis · Answer

Good suggestions that I will use for sure.

Thanks for responding.

Lawrence

Larry Davis · Answer

Wow!!!! What a well thought out and informative response. Thank you for your response as I will definitely follow this practical insightful approach. All the responses here at this forum have been very good and on point. All pointing in the same direction. Thanks again. I’ll keep in touch.

Lawrence

Josie Brown · Answer

I would suggest interviewing different property management companies and checking out their reviews online first! You'll definitely want to find one that is a good fit for you. To confirm work was completed on the property, you can always ask for photos of the work that was done.

Michael Smythe · Answer

@Larry Davis read below...

Encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone give you a referral, don’t make the mistake of assuming that PMC will meet your expectations, just because they met the expectations of the referral source.

We also can’t believe how many owners hire the first PMC they speak with!

Then they complain their expectations aren’t being met!

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

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!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “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

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😊

Brandon Goldsmith · Answer

Interview a handful and get a feel for how their operations work. You should be able to find a handful of lists of questions to ask online if you don't know where to start. You could always ask for references of other out of state buyers as well. @Larry Davis

Larry Davis · Answer

Thanks a bunch for your input on this.

Much appreciated

Lawrence

Cameron Tope · Answer

I would read David Greene's book on out of state real estate investing.

Start with building your team. A trustworthy team is the key to investing out of your local area.

Best of luck!