Investing at a distance... When to find a property manager?

Question

Hello, wise people of Bigger Pockets!

I'm looking to buy a small multi-family in Chico, CA, which is a three hour drive from my place. I plan on getting a property manager for my future investment, so I'm wondering when I should start looking into that. Would you recommend I start interviewing property managers early in the process (e.g. now, before I've even offered on a place) or later down the line? Thanks for your guidance!

Jay Hinrichs · Answer

@Anne Chiramberro

I like Chico  and staying in CA is a very smart move.. remember many who comment on out of state investing on this site only do that because they are sales people and make money steering CA investors out of state simple as that, so consider the source.

And also its not all about cash flow... out of state properties won't appreciate like CA property... So take that into consideration..

I like to start with PM and work backwards or at least in concert.. PM may know of a deal IE: one of their existing clients wants to sell.. it could be an off market deal.. remember when you buy a property you don't work with your agent anymore you work with your PM

And in Chico were your heavy to college students PM will be necessary in my estimation.

At least what I witnessed at My Daughters apartment when she went to Davis,,, you will have turn over expense every year.. but you should be able to get the parents to sign the leases that's the good part.

What @Elizabeth  Colegrove

is talking about is renting A class properties you can do that from afar I do it in Mississippi and I live in Oregon... But I would never try to manage out of state B class or lower you will not have a happy day over the long term. Nor to college students...

Paul Timmins · Answer

@Anne Chiramberro

Go to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

Paul

Anne Chiramberro · Answer

Thank you for all of your advice. I've been pre approved for a mortgage and am working with a local agent in Chico to find a property. Guess it's time to start interviewing property managers! I'll think about managing it myself from afar, but as a newbie investor I'm hesitant to try it.

My agent recommended I find a property manager in town and do a very limited contract with them with a max dollar amount of how much they can spend on "emergency repairs" without consulting me first. Sounds a little like what Sue K. is talking about.

Lots to think about! Thank you!

Christian Galassi · Answer

Hi Anne,

I also live in the Bay Area and have been investing in Chico real estate for the last 10+ years. I own a few properties near the college and rent them primarily to students, but I  also own a SFH that is a bit further from the college that generally rents to local professionals.  I don't use a property manager so I cannot give feedback on one specific company over another, but based on my observations over the years there are a lot of student rentals that are poorly managed and in bad shape.  Make sure you screen your management company well. Maybe get a listing of properties under management and drive by/ take a look at them to see if they are being maintained up to your standards.

Good luck

Elizabeth Colegrove · Answer

first off we self-manage 3 properties from the otherside of the country. So it's deifnitly possible!

That being said I would start interviewing once you were prequaled and knew you were buying. There is a reason I got started self managing and it wasn't because it was my first choice ;)

Vincent Grant · Answer

Hi Anne,

I live in California and own investment properties in other states and across the pacific. I suggest you look for a property manager while looking for a property. Check out this site, it's very useful when looking for a property manager ( allpropertymanagement.com )

Account Closed · Answer

Are you sure you need a PM?  The most time-consuming part is screening a tenant.  Then, you really can do most things from afar - find  a plumber, etc.  You set up payments via PayPal.  You go do inspections twice a year or go if there's some major issue.

But, really, if you screen properly and take the time to find a good tenant, you shouldn't have to spend a lot of time on the place after that.

If I was you, and I really didn't want to do anything, I'd look for a real estate agent willing to work for a flat fee.  What about the agent who sold you the place?  Write up a contract that they get a flat fee, or they do what you don't want to do for a reasonable fee.

PMCs are notorious for nickle and diming you do death on all kinds of fees and "emergency" repairs.  I think you can find a realtor to agree to do whatever you don't want to do - for a flat fee, with no hidden costs or secret deals with their own maintenance guys or friends who give them kickbacks.

I say this because my daughter was thoroughly ripped off by a PMC on "emergency" repairs.  There are PMs on this forum who only charge flat fees, so it's not unheard of.  Write up your own deal and if it's fair, someone will take it.

Christian Galassi · Answer

@Anne Chiramberro

I have someone local in town who helps me out if I absolutely need it, which is a huge advantage.  I have a list of local plumbers, electricians, handymen, etc. that I call upon for any needed repairs. Chico is great because the labor rate is much less then the Bay Area.  I've only had a couple of tenant issues over the years and I really can only blame myself for those (bad screening on my part)  But overall the majority of college students that I've rented to were good kids. Most have little to no rental history/ work experience, so the trick is to make sure they have solid financial backing either from their parents, grandparents, trust funds, college savings plans, student loans, GI Bill, etc. And I almost always get a co-signer on the leases.

PM me if you have any more questions. I don't mind sharing some of the hard lessons I've learned along the way.

Good luck

Bhekizwe M. · Answer

Look into finding a property manager as early as possible.just take note of other experiences.

Jay Hinrichs · Answer

@Anne Chiramberro

you may want to look at 1st TD investing right there IN SF bay area you could make 8 to 10% secured by the very best Real Estate in the country.. and then figure out what you may like to buy... Note investing is a nice alternative to actually owning the asset.

Investing at a distance... When to find a property manager?

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