Using property manager to run renovation

[Esteban Cardenas]

I'm a new investor in buy and hold RE.  I'm looking for my second out-of-state property currently.  Would it make sense to have my property management company manage the renovation on any new property acquisition or find contractors myself to do the reno?  Just wondering what common practice is for most other investors who invest out of their home state.  Thanks in advance. 

[Ritch Bonisa]

Your PM might be a good choice - at least they have market familiarity and will know some contractors.  Sometimes the problem with PMs managing rehabs is - they may have a tendency to view things through their own lense when it comes to scope of work.  This can be a good thing and it can also have negative effects in some instances.  We'd all prefer have everything be new or replaced because it can solve alot of issues with tenants and the time it takes to manage a property.  

Looking at outside markets can work very well, but you must have a team in place prior to purchase. If you end up looking in the midwest, keep in mind that many of the MF properties will be in the tougher areas. Many MFs in gentrifying areas will become flips (conversion to SF for retail).  Of course, all markets are different, so that certainly doesn't apply everywhere.  

I'm in Indianapolis and the mistakes I see remote investors making is not understanding the differences in price points from the coastal markets vs. the midwest.  There is a tendency to want to take the formula you use in your market and try to apply it to a different market - this may not work.  An example would be that my market is predominately a SF rental market, duplexes are normally in lower end.  

Pick a market and begin to study it.  See what's for sale and begin plotting price points and rents on a google map.  Try to build a picture of what is going on in that market.