Out of state investing

Member since 2026 · 8 posts · 8 votes

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.

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Jeff Roth

Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 475 posts · 265 votes

Hi Braedon from Arizona-

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.

To Your Success!

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Jayson Bates
Lender · McKinney, TX · Member since 2026 · 17 posts · 3 votes
1d
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.
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
1d
@Braeden Hoff
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.
crushed in Alabama:
crushed in Memphis:
crushed in Cleveland:
a surprise crushing in Michigan:
and more general absolute crushings.

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Gladimir Lobo
Real Estate Broker · Cleveland, OH · Member since 2023 · 251 posts · 85 votes
22h
PM don’t kill profit. The ignorance tax does.
If 10% PM kills it, was it ever really there?
Poor investment IQ kills deals. Plain and simple. Respectfully.
I have OOS in CA/Israel making double digit returns in CLE, while local investors are taking L's.
PM and distance ain’t the problem
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- Marcus Auerbach
  Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
  4h
  I am calling BS: you are comparing the best deal from an OOS investor with a bad deal from a local investor. In 2026, even on a great deal, cashflow will rarely exceed 10% of rent. The PM wipes that out.
  But that is not even the real problem: operational inefficiencies will cost you another 20%. And meanwhile most OOS investors don't realize that their property deteriorates to the tune of 5k or 10k a year with deferred maintenance and degrading condition more than eating up their $76/mo cash flow. They find out years later when the bill arrives.
  Taking advantage of overseas investors is even easier: every HVAC contractor will quickly realize that an overseas investor has no idea what a forced air system is - and charge accordingly. Just a random example.
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Anthony Smith
Real Estate Agent · Detroit, MI · Member since 2016 · 148 posts · 60 votes
21h
Braeden, everyone above is right that you underwrite the management fee from day one — a deal that only works if you self-manage from another state isn't a deal. But from where I sit in Detroit, working with out-of-state owners, the fee percentage isn't what usually decides whether remote ownership works. It's the two things the fee doesn't cover: how fast a vacant unit gets turned and re-rented, and whether anyone local actually verified the property before you bought it.
A manager at 8% who leaves a unit sitting for 45 days between tenants costs you more than a manager at 10% who turns it in two weeks. And before management even starts: get eyes on the property that aren't the seller's or the listing agent's — real video of the mechanicals, the roof, the basement — and run the rent against what's actually achievable on that street, not the pro forma. Most bad out-of-state purchases I've seen were lost at the purchase, not in the management.
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Alim AbrahimBusiness Member
Real Estate Consultant · Oklahoma City Metro · Member since 2026 · 7 posts · 1 vote
18h
Braeden, a property manager doesn't kill your cash flow if you underwrite for it from day one. It's a line item, not a surprise. The right property manager could protect you from bigger losses in many cases, whether your rental is in the next neighborhood, or a thousand miles away.
It's not common, but you can find properties that already have a tenant in place that was placed for you, and a property manager you've vetted and trust. When the seller also covers the monthly management fee for the first two years, and the leases carry 3% annual rent escalations, the rent-increase conversation with the tenant has already happened. The math starts to lean your way.
What really hurts owners with a small number of doors is expenses: repairs and unit turns. New construction helps a lot there. When a property is designed right, there isn't much to fix, and turns are cheap.
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- Marcus Auerbach
  Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
  4h
  A regular turnover on a SF costs us at least 6k: 2k in lost rent and 2k in re-leasing cost and at least 2k in repairs.
  But if the tenant has been there for many years, 2k often does not cut it - new carpet, fresh coat of paint add up fast and a few odds and ends add up fast.
  And there are random things like removing an old tree that lifts up the concrete driveway. Was about 3k to get that tree cut and lifted out, then 1k to break and remove the concrete, then stump grinding and removing the big root that was lifting the slab, then 4k for pouring new concrete - and that was only a section of the driveway.
  The more complex repairs are, the more they involve different contractors to be coordinated, the more it hurts not being personally present to oversee and coordinate. Most of our portfolio is 1960s Sf homes, so new construction would definitely avoid these types of issues..
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David MayPro Member
Homeowner · Member since 2026 · 3 posts · 0 votes
10m
It doesn’t have to, they usually take 5-10 percent. Depends on the contract and how much they piecemeal you for repairs, not to mention a reserve fund.
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