Advice- What to know before buying

[Vincent Chiarelli]

Hello Everyone! My names Vinny, I'm an inspired investor. Looking to find my first out of state rental. I could use some advice to how our of state investing works. I have lenders and agents lined up in my cities of choice. What precautions should I know abouttake? Should I be buying properties with tenants already (easy route) or should I be starting from scratch? Will I ever have to go to the property? How much should I be paying towards property management? Thank you all for the help ! Excited to join BiggerPockets 

[Drew Sygit]

@Vincent Chiarelli multiple posts?

Putting all your concerns in one post is usually best:)

Many posters will recommend finding an, "investor-friendly" agent to start with.

The challenge is, a least 95% of agents say they're "investor-friendly", just to get a commission. Many hav good intentions, but don't understand their emotional-based sales process for owner-occupants is totally opposite of the analytical approach an investor should be using.

I just read a post from a newbie investor in Jacksonville, FL, that couldn't find an "investor-friendly" that had their own rentals, so went with an agent off Zillow. They were posting for help in evaluating if the property that agent found them is actually a deal or not!

We always recommend starting with a PMC - they will have to manage whatever you buy for an extended period of time. Who do you think had their interests more aligned with an owner - the PMC or a transaction-based agent?

So, then you have to find a trustworthy PMC that can either find you a property or connect you with an agent they know that really understands how to work with investors!

We already posted some helpful info on your other post, so we'll post some helpful advice here about finding good PMC...

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

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.

Also, 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 gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

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 – so, they often select the first PMC they call or that calls them back!

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!

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😊

https://www.biggerpockets.com/member-blogs/3094/91878-how-to-screen-a-pmc-better-than-a-tenant-part-2-communication-and-docum

https://www.biggerpockets.com/member-blogs/3094/91879-how-to-screen-a-pmc-better-than-a-tenant-part-3-the-management-contr