Buying Rentals Out Of State Without Turnkey Companies

[Danny Jimenez]

Hello Everyone!

My S/O and I are currently exploring the option of investing out of state for rental properties and would like to do it on our own(by this I mean no turnkey companies).

Just for some context, We live in Los Angeles, CA. And would like to take advantage of our higher wages to invest in states that the market is a lot more favorable to us. (Looking in the $150,000 range and below).

I’m sure we have plenty of folks here who have done the same which is the reason for my post.

For those who have taken this path, what would be some tips/things you could tell yourself if you were to start all over again?

How to screen rental property management companies , things to avoid, things to look for. Any advice would be greatly appreciated.

Look forward to chatting to all.

-Danny.

[Drew Sygit]

First, our standard response about screening Property Mangement Companies:

In our experience, the #1 mistake landlords make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Landlords mistakenly ASSUME all PMCs offer the exact same services and operate the exact same way, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services.

This also leads them to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it.

We have a 12 page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each don’t cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊