Self-managing out of state: real move or expensive lesson?

Question

I self-manage almost everything I own, with a small team reporting to me, including an RV park here in Houston and short-term rentals about three hours east. Every time I price out handing it off, the 8-20% management fee (depending on whether it's long- or short- term) is the easy number to see. The leasing fee, the maintenance markup, and what a bad turnover costs are the parts that actually decide it.

My questions:

If you self-manage in a state you don't live in, what specifically makes it work? A handyman on retainer? A local agent doing showings for a flat fee? Software carrying rent and maintenance requests?

And if you tried it and went back to a property manager, what broke?

If you don't have any out-of-state rentals, are you still handing it off to a manager or handling yourself?

Numbers, if you've got them, make this even better! Best answers get featured in the BiggerPockets Investor Brief newsletter. Thursday edition this week

Drew Sygit · Answer

@Garrett Brown - I kinda take offense to a BiggerPockets staff member "feeding" the inaccurate mantra that, "no one will ever care about your property the way you do"😞

I can PROVE that we do a better job of managing than a decent portion of our owner clients.

Many owners are terrible at:- Applicant Screening - doing it by "gut feel".- Rent Collection & Evictions - letting tenants get too far behind- Maintenance - either spending too much on their rentals, like they are living in them, or ignoring maintenance issues and being slumlords.

The REAL problem is too many investors picking TERRIBLE property management companies and then stating ALL of them are terrible.

So, why are you feeding this inaccuracy?

Jimmy Lieu · Answer

Great question, Garrett. I think the biggest factor with remote self-management is having reliable boots on the ground. Software can handle rent collection, leases, communication, and maintenance requests, but it can’t meet a contractor, check a repair, handle a lockout, or figure out why a turnover is taking twice as long as expected. If I were self-managing from another state, I’d want at least one dependable handyman, backup contractors for the major trades, and someone local who can handle showings or physically check the property when needed. I’d also compare the true cost of self-management against the full cost of a PM, not just the monthly percentage. One poorly managed turnover, unnecessary repair, or extended vacancy can quickly wipe out what you saved on management fees. For me, the question is less “Can I manage remotely?” and more “Do I have a local system that still works when something goes wrong?”

Bill B. · Answer

Garrett I use a PM in Vegas exactly because I don’t ahead those three problems. It’s $300 to place a Tennant, just over a week’s rent, very cheap. There’s no markup on repairs, in fact. I usually get a discount, plus more than 90% are handled same day.  And lastly the turnovers are waaaay faster and probably cheaper don’t by my PM than done by me. On average I would say 5-10 days, and my average tenant stays 4-8 years so there’s some work to be done. This is all done for 8% of collected rents.

OTH I do self manage my only out of state property.  The rent is my highest.  ($3,500) So even 8% is $280/mo. I probably woulda paid it. But I found a pm that charged 1 months rent with a guarantee of rent for 2 years.  That tenant has just renewed for 2 more years (year 11 and 12). It’s also a townhome where I have zero outside the walls responsibility.  I’ve replaced a microwave/fridge/garage door opener/springs in 10 years.

To me the screening is the most important part and the part I hate the most. At least in class a-/b+ properties.  Now my b/b- Vegas properties not only is screening important. But I think the tenant dealing with a PM with a portal and official system for everything gets treated differently than a mom/pop landlord.  They know late fees are tacked on everytime, pay or quit notices go out, etc etc.  Not stuff you couldn’t do yourself. But many of my tenants come from their website, so they’re a known product.  Anyway. I rambled. Sorry.

Candyce E. · Answer

I self manage a property in a different city (about 90 minutes from my home) and have a manager for a property in another state (8 hours away). In my experience, the property manager is less transparent, takes longer to find a tenant, does less due diligence (I'm very detailed with my tenant background checks), and is more likely to just charge me to fix something instead of expecting the tenant to pay (for example, breaking the garbage disposer by grinding up a shot glass). They also seem to prefer shorter leases. I do a 2 year as standard and it's like pulling teeth to get them to do the same. I hate the lack of transparency and would prefer to self-manage, but I don't know the city and don't have a list of reliable contractors to depend on. (we chose the city because of the rental market there, not because it's somewhere we ever lived)On the other side of this is maintenance. I fix things immediately when the tenant reports issues. But I am not as proactive as I should be on the property I self-manage. I'm not doing regular inspections because it's a PIA to make the drive. That tenant has been there 8 years, and I suspect that we're going to need to make a lot of repairs due to deferred maintenance (poor judgement on my side, I know). The property manager is inspecting the other property every quarter, changing furnace filters, checking smoke alarms and checking for leaks. So the property is probably being better maintained.

So I don't know that there's a hard and fast answer to the question. Like most things, it depends. But my plan is to sell the out of state property eventually and get something closer to home.

Adam S. · Answer

My uncle once told me, “It’s never a good idea to be penny wise and pound foolish.” That advice has always stuck with me.

If you own a six-figure, or higher, asset and you’re hundreds or even thousands of miles away, trying to save a few bucks by not having a property manager may not be the wisest move. Sometimes saving a dollar today can cost you ten dollars tomorrow.

Now, property managers are a dime a dozen these days. The key is finding a proper property manager; not just someone who collects a management fee and calls it a day.

So, what makes a good property manager?

Experience matters. Look for someone with a proven track record who has been in the business for a significant amount of time.

A licensed broker should be in the driver’s seat. Not simply a real estate salesperson. There’s a difference, and it matters.

Proper insurance and documentation. They should have the appropriate insurance coverage and professional forms in place to protect both you and your property.

A detailed property management agreement. Everything should be clearly spelled out from A to Z. You should know exactly what they handle, what they charge, and what happens when something goes wrong.

Their own maintenance team is a major plus. Having people they know and trust who can handle most repairs can save time, money, and a whole lot of headaches.

Personally, I prefer a reasonable flat-rate structure rather than hourly billing, although that’s usually negotiable.

My reasoning is simple: if a property manager bills by the hour, there isn’t necessarily much incentive to get a repair completed quickly. If they charge a reasonable flat fee plus the cost of supplies, everyone has a little more incentive to get the job done efficiently and correctly.  Additionally, they should produce a copy of all materials to you to prove there are no mark-ups on the materials.

At the end of the day, managing a valuable property from hundreds or thousands of miles away isn’t the place to pinch pennies. The right property manager can protect your investment, save you time, and give you some much-needed peace of mind. The goal isn’t to find the cheapest property manager. It’s to find the right one.

Jamaal Pratt · Answer

Garrett, I think the management percentage is often the easiest number to compare, but not necessarily the most important one.

I’m with Emerson Property Management here in Houston, and from the management side, I’d look at the total cost of self-management versus professional management. Vacancy days, quality of tenant placement, turnover costs, maintenance coordination, response time, delinquency, and the owner’s own time can easily matter more than the headline management fee.

For out-of-state self-management specifically, I think the biggest question is: what happens when the system breaks?

Software can collect rent and organize maintenance requests, and a good handyman can solve a lot of problems. But when the resident stops paying, the normal handyman is unavailable, a repair needs multiple vendors, or you have a difficult turnover, you need someone local who owns the outcome rather than just completing a task.

I’d be interested to hear from owners who have actually tracked the numbers both ways. The comparison between management fees saved and total operating performance would be especially interesting.

James Brazil · Answer

I have 2 SFH long term rentals I self manage in a state where I do not live. However, I used to live there until 5 years ago so I have family and friends who I can fall back on if absolutely needed but I mainly developed a relationship with a smalltime contractor or 2 who, as part of the deal when I hired them to do the house remodel, was to be "my guy". I was upfront with them and told them my situation of being out of town and worried about not being able to take care of my tenants. I call them when I need little things done and they take care of me. As I plan to buy more fixers in the area and turn into rentals I will keep giving the same contractors work in exchange for helping me out. Buying them a nice bottle of bourbon as a Christmas present never hurts either. I also fly back regularly to see family. Funny how on the same trip I also coincidentally find time to do inspections on the properties and shake hands with the tenants and contractors to check in so I can write off the cost of the flights!

Lucas Thomas · Answer

Hello!

I used to own a property management company for a decade and do both self-management and have a Property Manager in some of the five states I own.

I self manage in states that:

• Landlord Friendly = Evictions take 30-60 days and attorneys can do the evictions cheaply. = The City Leaves me ALONE
• = Evictions take 30-60 days and attorneys can do the evictions cheaply.
• = The City Leaves me ALONE
• I have a Good Real Estate Agent (I usually Train them myself to do Rental Listings)
• = I usually add all the "boots on the ground activities" to their Listing Fee - Includes lockouts, showings,  and other oddball requests
• = I usually add all the "boots on the ground activities" to their Listing Fee - Includes lockouts, showings,  and other oddball requests
• - Includes lockouts, showings,  and other oddball requests

Landlord Friendly

• = Evictions take 30-60 days and attorneys can do the evictions cheaply.
• = The City Leaves me ALONE

= Evictions take 30-60 days and attorneys can do the evictions cheaply.

= The City Leaves me ALONE

I have a Good Real Estate Agent (I usually Train them myself to do Rental Listings)

• = I usually add all the "boots on the ground activities" to their Listing Fee - Includes lockouts, showings,  and other oddball requests
• - Includes lockouts, showings,  and other oddball requests

= I usually add all the "boots on the ground activities" to their Listing Fee

• - Includes lockouts, showings,  and other oddball requests

- Includes lockouts, showings,  and other oddball requests

Doesn't Really Have Any Weather (i.e. the Southwest)

= I own in a lot of desert regions so maintenance is less of a concern in these areas

= Don't need to monitor them as much as not much can go wrong

-Pipes don't freeze,

-Roofs don't get blown off,

-squirrels/etc. move in and destroy my attic

- No Hurricanes, Wind Storms, or Flooding

- No yards to landscape, no walks to snow shovel, etc.

- Just Dirt

Have Good Insurance

= If the local insurances don't constantly try to wiggle out of payouts, then I don't have to monitor as much

= If local insurance is notoriously bad, then you have to have it monitored more heavily so you can prevent                                   issues

Have a Good Contractor Stable

= I do a thing I call a Quote-a-thon where I schedule 15-20 contractors to come bid on a move-in ready, etc. and I explain to them that I am an owner who has many doors and I need someone who can do my work for cheap as I constantly have work. I rank them, use them, and toss them and whoever keeps answering my phone calls, wins.

= I do this in every city I own in until I get a good stable.

Combine these in different ways, and I decide if its worth managing on my own or not.

=============================================================================================

I hire Property Managers when:

• Landlord Unfriendly = Evictions take awhile (multiple appearances) and require homeowner participation (It happens)= The City is AGGRESSIVE. I own in one city where they will tell you your grass is too short, give you 48 hours to cut it and will cut it for you, and charge you against your property taxes at WAY TOO HIGH.
• = Evictions take awhile (multiple appearances) and require homeowner participation (It happens)
• = The City is AGGRESSIVE. I own in one city where they will tell you your grass is too short, give you 48 hours to cut it and will cut it for you, and charge you against your property taxes at WAY TOO HIGH.

Landlord Unfriendly

• = Evictions take awhile (multiple appearances) and require homeowner participation (It happens)
• = The City is AGGRESSIVE. I own in one city where they will tell you your grass is too short, give you 48 hours to cut it and will cut it for you, and charge you against your property taxes at WAY TOO HIGH.

= Evictions take awhile (multiple appearances) and require homeowner participation (It happens)

= The City is AGGRESSIVE. I own in one city where they will tell you your grass is too short, give you 48 hours to cut it and will cut it for you, and charge you against your property taxes at WAY TOO HIGH.

•

• I Don't have a Good Real Estate Agent= without reliable boots on the ground, its very hard to manage the odds and end of a rental.
• = without reliable boots on the ground, its very hard to manage the odds and end of a rental.

I Don't have a Good Real Estate Agent

• = without reliable boots on the ground, its very hard to manage the odds and end of a rental.

= without reliable boots on the ground, its very hard to manage the odds and end of a rental.

Has Crap Weather

= Needs to be monitored heavily

-As Pipes freeze, which can literally destroy the entire homes plumbing.

-Roofs blow off and leak more often as they get hit constantly

-Squirrels/etc. move in and destroy my attic

• - Hurricanes, Wind Storms, or Flooding destroys more often.
• - Has Yards to Monitor or the City will get you, has walks to shovel of snow or the tenant/city will get you

- Hurricanes, Wind Storms, or Flooding destroys more often.

- Has Yards to Monitor or the City will get you, has walks to shovel of snow or the tenant/city will get you

Have Bad Insurance

= If local insurance is notoriously bad, then you have to have it monitored more heavily so you can prevent                                   issues, as your beholden to bad insurance

Have a Bad Contractor Stable or don't have time.

= I lose contractors all the time, and I have to decide if rebuilding the stable is worth it over working and making money. Ha

Combined, I usually hire Property Managers when the nitty gritty of a city, makes it too much of a chore to self-manage as I could be making money with work, instead of micro-managing a property I hate 2 time-zones away.

==================================================================================

WARNING - *DON'T GET ME WRONG*

I HATE PROPERTY MANAGERS!

They are garbage by default.

And this is what you have to lookout for:

• - They are managing one or two units for you = They Don't CARE ABOUT YOU!

- They are managing one or two units for you = They Don't CARE ABOUT YOU!

• - If you have a Class C or Lower Property = THEY DON'T CARE ABOUT YOU! (This is most of my portfolio.)

- If you have a Class C or Lower Property = THEY DON'T CARE ABOUT YOU! (This is most of my portfolio.)

• - If the Management Co owns the Maintenance Co - THIS IS UNACCEPTABLE! (Unless they charge a flat Hourly, but they still will try to pull fast ones cause they think you are stupid or lazy.)

- If the Management Co owns the Maintenance Co - THIS IS UNACCEPTABLE! (Unless they charge a flat Hourly, but they still will try to pull fast ones cause they think you are stupid or lazy.)

• - Don't be afraid to FIRE PMs as they ALL only have a certain "Half-Life" as they will get GREEDY, LAZY, or DIE.

- Don't be afraid to FIRE PMs as they ALL only have a certain "Half-Life" as they will get GREEDY, LAZY, or DIE.

• - Even when I have a Property manager, I will not allow them to find tenants for me and give the listings to my "Good Real Estate Agent" and sometimes have a brittle "Contractor Stable" as I don't trust their prices.

- Even when I have a Property manager, I will not allow them to find tenants for me and give the listings to my "Good Real Estate Agent" and sometimes have a brittle "Contractor Stable" as I don't trust their prices.

So have very low expectations and find a manager that is adequate, as good ones don't exist.

In conclusion:

Every city is different.

Its really up to if you have the expertise to build the system in a city to operate as a self-managed landlord or if you have the ability to hire the right people in the right places consistently.

L. Thomas

Drew Sygit · Answer

So, you're ratting yourself out on the terrible service you provided your clients when you managed for others?

Boris Vainer · Answer

I have tried both, a PMC and an individual PM, and both turned out to be total crooks. The PMC, called Chambers Theory, took me to the cleaners from day one, so I ended up in the red the very first month of their "management". They decided to ignore the owner (me) altogether ordering all kinds of services without my consent. One time, when I objected to a cleaning they agreed not to do it at first, but then went ahead and still did it anyway charging me a pretty penny for it too. The individual PM was recommended by a friend. This "manager" found tenants, a bunch of teenagers, who totally trashed the house in just a few months while charging me for lawn maintenance. He also rented one of the bedrooms without a lease and without my authorization.

Self-managing out of state: real move or expensive lesson?

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