I'm currently in Arizona and plan to get my first property here but I don't plan on staying here so I'm open to investing out of state but the only thing is that hiring a property manager. Does having a property manager kill your cash flow and is having a property manager worth it with a small number of doors.
You asked about investing out-of-state and if a property manager is worth the expense even for smaller properties.
Great question! I always recommend investors use a property manager even if they live in-state and underwrite their investments factoring the cost of the property manager.
A good property manager is one of the most important members of your investing team. They should not only be keeping your property occupied and working with tenants to reduce turnover but improving the property and rents to maximize your return on investment. A property manager also helps keep your real estate investing as passive as possible so you can do other things and scale your portfolio without getting burned out from doing the property management work yourself. They also keep you compliant with local and national rental and housing regulations.
This is especially important as an out-of-state investor.
Braeden, on your budgeting question, the simplest way is to build it into the numbers line by line before you make an offer: the monthly fee (often 8-10% of collected rent), a leasing fee each time the unit turns (commonly half to a full month's rent, which you can spread out by assuming a tenant stays about two years), any renewal fee, and then your usual vacancy, repair and capex reserves on top. Add the mortgage payment, taxes and insurance, and if the rent still covers everything with a little left over, the deal works with a manager. If you're financing, the lender will look at the full payment against the rent too, so running it this way up front saves surprises later.
boy, you got a bunch of flowery, cheerleading, AI nonsense. everyone except @Marcus Auerbach and @John Clark , and now me.
what kills cash flow is investing out of state in the first place... because there isn't any cash flow right now, anywhere, if you actually factor in all costs associated with investing and don't pretend they don't exist.
but don't take my word for it - talk to these folks.