Am I in over my head????

[Matthew Fitzgerald]

We are new investors in California and our goal is to create cash flow to replace our w-2. We are looking out of state and we have a 20 unit property in escrow. It fell in our lap thanks to a great realtor. 500k with rents @10600. Meets the 2% rule so far so good. Also I have done a full work up on the numbers and they work. We should make roughly 150-175 per door not a slam dunk but not bad for our first deal. We are in talking with a lender and they seem to think we should fund (loan is with under writer as of today) here is my concern. We had found a PM group that we really liked and I have been communicating to them about this property. They seemed to be on board then suddenly got an email this week stating they will not be able to manage this property because of the location and possible tenants, section 8. I'm looking for a new PM. I don't want to be a slum lord. I'm fearful that we are biting off more then we can chew for our first property. Any thoughts

[Kristina Heimstaedt]

Your property manager is your teammate in the deal because you're leaving them with the responsibility of your income. If you found a property manager you like (teammate) and your teammate doesn't want the deal, blessing in disguise. I'd be more inclined to talk to the property manager and see if they don't have a property owner who is tired of having a property. The other thing to consider asking your property manager would be to see if they have any owners who have owned the properties for more than 30 years. I'm not sure how this translates out of California, but it is my understanding that in California, you stop benefiting from tax depreciation after 27.5 years (please consult your CPA for confirmation). 

Capitalize on the property manager because they're the ones who create the income out of your property for you. Plus, you also want to give your property manager a product that they're excited about. Typically if they're excited, it means that it's rentable and income producing.