How to Manage Out of State Rental Properties?

Question

Hi BP community. I am fairly new here, I started looking into BP and listening to the podcasts when I was purchasing my first property last year. My first property was a single-family home purchased just before I turned 20 years old. I am house hacking with it and it is working great. I am always looking for other ways to continue investing and expanding/building my real-estate portfolio. I am looking at out of state rentals right now, just doing research, and I was wondering if it was possible to manage an out of state rental property by yourself instead of hiring a property manager. I found a few properties of interest in Maine, and I read that the market there was pretty good. I currently live and work in Northern Michigan. Any thoughts/comments are welcomed and appreciated. Thanks everyone.

Jeff Roth · Answer

Hi Jagger-

Great question.

I am a fellow Michigander from Ann Arbor.

Nothing against Maine but the Midwest has seen some of the strongest rent growth in the country.

When I consult with my clients, if they don't have the budget for a market like Ann Arbor, I direct them to Lansing, MI.

The cashflow is strong, the economy is stable, it is the State capital so there is always economic development creating new jobs, the price point is relatively affordable because the cost of living is lower there, and appreciation is predictably linear.

I also advise investors to buy duplexes and up so you always have a rent check coming in most of the time if you have a vacancy. A single-family house is a binary investment. It is either rented or it's not and when it's not it can quickly become a financial alligator.

I would be surprised if a duplex in Lansing was more expensive than a single family house in Maine.

As far as managing from a distance without a property manager, I would not advise it personally. I always advise my out of town and out of state investors to buy the property factoring the cost of a good property manager so you still have the returns you want. You can do that in Lansing.

To Your Success!

Michael Smythe · Answer

@Jagger Boyer why go to Maine when there are great investment opportunities in Grand Rapids and Metro Detroit?

Did you watch any of the NFL Draft and see all the positive feedback about Detroit?

Regarding remote managing, in our 24 years of experience, dealing with hundreds of investors, what we've had to bail DIY Remote Investors out of is mostly Class C properties with some Class B.

So, in our opinion, one can remote manage a Class A property fairly easily if you are organized.

Class B requires more organization and knowledge, to avoid tenants taking advantage of you.

Class C should NOT be done DIY - hire a PMC!

BTW, how do you plan to handle:

1) Finding tenants and doing showings?2) Screening applicants?3) Turnover maintenance?4) Ongoing maintenance with tenants?5) Evictions?6) MoveIn and MoveOut inspections to document condition for security deposit reconciliation?There's many more...

Min Zhang · Answer

Hey Jagger! Welcome aboard! I recommend reading “Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties” - I found it to be very helpful when I got started investing 2.5 years ago.

Here is a summary of the book.

https://www.nateliason.com/notes/long-distance-real-estate-investing-david-greene

The book also mentions the importance of having a rockstar Realtor, contractor, lender, and property manager.

Let me know if you need assistance.

Brandon Goldsmith · Answer

As some other mentioned there are a good handful of questions to ask such as how they screen tenants, lease units, fee structure and try and ask for references on some of there older clients as well as newer ones as well. @Jagger Boyer

Melanie Thomas · Answer

Jagger, dropping by to give you props! Congrats on kicking things off at such a young age, you're going to excel. Keep up the awesome work, onwards and upwards!

Dan Weber · Answer

@Jagger Boyer get connected with a good property manager on the ground here and you'll do just fine. Shoot me a dm with what areas you're looking and I can recommend a couple of PM's to connect with.

Najma Osman · Answer

Hey @Jagger Boyer, unless you have more time on your hands and have a strong network in that state to help with leasing, rush to the property for emergency repairs, help with evictions, handle inspections and turnover.... I'd recommend hiring a pm!

Kyle Mccaw · Answer

@Jagger Boyer congrats on investing in real estate.

Managing out-of-state can work. But I have rarely seen it done well. My office has handled many lease ups for out of state investors that self-manage. At the very least you need a local person to handle the lease up experience with the tenant. There are soo many scams out there you need someone to watch out for you and the tenants.

Also keep in mind a local manager should also have great vendors relationships that prioritize their work orders. Hopefully with better pricing. When you need a vendor, you will be looking someone up on google. And your one time jobs will be low on their priority.

Jagger Boyer · Answer

Thank you so much!

Jagger Boyer · Answer

Thank you for your suggestions. I do for sure want my next investment to be a multi family property.

How to Manage Out of State Rental Properties?

How to Manage Out of State Rental Properties?

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