Do you own a 8-20 unit MF apartment out of state?

Question

Hey Everyone!

It almost a given that having an on-site property manager for larger apartments (25+ units) will yield better ROI and is the right way to manage larger complexes. However, I see very little info here on how investors are managing their mid-size (8-20 units) multi-family apartments (especially ones that are out of state). Are the local property management companies often interested in dealing with these type of properties in B areas? Most of the forums I read about hiring property management companies are for SFRs, I need more insights on how to best plan for managing a mid-size MF from long distance. Looking forward to learning about it from your knowledge/experiences and how you manage them. TIA!

HP

Todd Dexheimer · Answer

I wouldn't necessarily call what he's talking about mom and pop investor. Yes if you buy one or two properties and kind of half self manage them, but if he is being professional and set it up properly then I would disagree with the "Dangerous" notion.  I went from $20,000 to over a $15mm portfolio with this dangerous Mom and pop model.  I would not have gotten there by investing $20,000 in other peoples syndications.

I'm a big proponent of large multi family and syndicating -  this is actually what I am doing right now. There are many real estate strategies that work very well and buying smaller apartment buildings renovating them fixing them and re-financing them is a fantastic way to build wealth.

Account Closed · Answer

I have a 16 unit apartment out of state.  I'd buy another if I could find one where the numbers work.  The key ingredient is a good PM, they will make or break you at this level.

Hardik Patel · Answer

Thank you all for sharing your information and recommendations @Jeffrey Holst, @Chris Tracy, @Todd Dexheimer, @Lane Kawaoka, Account Closed

Looks like a mission to find a solid property manager starts next..  while keeping an option open for tenant as a caretaker.

Todd Dexheimer · Answer

I own 4 buildings in that size range and use 3rd party property management. Each building we utilize a tenant as our caretaker. The caretaker cleans the common areas, replaces light bulbs and does minor maintenance. With that we discount rent. There are plenty of management companies that will handle these buildings, but I would find a few that can handle your properties before you buy.

Also, as for on-site management - In my experience you need 75+ units for that to make sense.

Chris Tracy · Answer

My team owns a 20 unit out of state, but it's student housing with a little more cash flow; so it's worth the while for the PM to take on the job.  That's what I've seen is that it's basically a crap shoot trying to get a company that actually cares about your deal, especially when it's a smaller property; which is why my team focuses on the bigger stuff (like 75+ units).

Gino Barbaro · Answer

@Hardik Patel

Hi Hardik

It is difficult to throw up a few posts on how to manage properties outside your market.  There is education out there to teach how to invest and utilize property management. We just did a podcast with Dana Dunford from Hemlane, you should check out her company.

It's all about being able to screen and hire the right management company for your asset, depending on size, location and experience of the management company

Gino

Alina Trigub · Answer

@Hardik Patel No matter where you go and it sounds like in your case, you plan to go to FL, AZ, and/or NV, I'd say it is very important to build your team first. The team must include at a minimum a good property manager, broker, lender, and a maintenance/handyman person. Btw properties may come from building these relationship as well!

Best of luck!

Elbert D. · Answer

It’s  pretty interesting some of you guys brought up the caretaker. I haven’t heard of that before.

As far as mid size MFHs for me I definitely plan to acquire some units of that size. Unfortunately here in Chicago many areas that are of that size are near bad areas or the Price and cap rate and cash on cash return percent is terrible. Such as many larger units up north in Chicago. But I know there are some that offer some decent numbers it’s just so extremely hard to find decent deals now based on market conditions.

The same goes for Indiana MFHs of that size. My question for you guys here where are you buying units of this size range? I see many people from California investing out of their state due to various reasons.

Bill B. · Answer

I don’t think that deal exists in Vegas. It’s pretty much “D class” fourplexes and much larger complexes. If you do come across something here (in Vegas) I’d be happy to look at it with you/for you.

-Bill

Do you own a 8-20 unit MF apartment out of state?

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