Getting a property manager to tour a prospect with me?

Question

Hello Everyone,

I'm getting ready to make an offer on my first (potential) deal in south King County, WA.  It is a fourplex that I think is currently rented out at a significant discount to market.

I'd really like to have a local property manager either take a look at the property with me when I tour or at least look at some photos to give me their opinion of what it could rent for.  However, in order to afford the property I would live in one of the units to qualify for an FHA loan, so the chances of the property manager actually managing the property in the near-term is basically zero.

Would a property management company typically do this?  Would they want to charge a fee in my case, since they won't be getting the business?  Any insight is welcome and appreciated!

Also, if anyone can recommend property management companies in south King County, I am all ears.

Many thanks!

Account Closed · Answer

@Ben Lukes I manage properties in Seattle and north to Everett so no, nothing near Federal Way, sorry. Typical mgmt charges range from 8-10% depending on the monthly rent amounts. And GO VIKINGS!!!

Account Closed · Answer

You could always ask :-)

Account Closed · Answer

My first thought was, how do you know it's rented significantly below market?

I'd start with the fact that you know you can get the rent you are getting.  You know for sure that amount works.

A decent resource, would be to look at the payment standard for that zip code on the housing authority website.  The payment standards (researched by HUD and adjusted by the local housing authorities) are based on fair market rents, and you should be able to rely on being able to get at least that much rent.  These are the amounts of rent the housing authorities will pay for rent to Section 8 landlords.

So, for instance, here's the King County list of payment standards for each zip code:

http://www.kcha.org/Portals/0/PDF/Landlords/Paymen...

Then, really, a trip to Craigslist should fill in the rest, or at least verify the HUD payment standards.  If it's near a college, you could also look at any off-campus listing websites to see what those listings say.

But, if you can make your numbers work with the rents that are currently being paid, then anything more would be gravy.

As far as finding a professional to give you advice, who wouldn't be getting any more business from you... I think that would be tough.  And if you ask a fellow investor, they may snatch it up lol.

Ben Lukes · Answer

Account Closed I see you are a property manager...mostly in Everett?  You don't manage properties in/around Federal Way do you?  What do you typically charge to manage units?

Congrats on getting to 28 units (or maybe more now?).  I'm also a former Viking.

Ben Lukes · Answer

Thanks Account Closed, will do.  I'm planning to post more details on the deal soon if the seller and I can agree on a price.

Account Closed · Answer

@Ben Lukes I have purchased a couple dozen rental properties for myself and investors over the years and it is very typical to not have access to the interiors until after an offer is accepted. I used to always think, "how am I suppose to estimate repair costs without viewing the units". These days I can gauge the condition of the interior and the associated rehab cost (generally speaking) by how low rents are and how long the current tenants have been in their units.

Best of luck in your search and keep us updated on the journey!

Ben Lukes · Answer

@Dawn Brenengen Sue K. Thanks to both of you for the excellent advice.  At this point I do have a buyer's agent, and he does some rentals of his own.  Overall though I think a profession property manager in this specific area would have better insight than he does.  I'll keep this in mind though if/when I look for another agent.

I think it is below market based on what I saw on Craigslist, but it would be great to have someone with deep market knowledge confirm my suspicions.  I'll definitely take a look at the link you provided, Sue.

I should clarify that there is a chance that would manage the property, but not for the period of time I am required to live in the building (1 year, I believe...).  Maybe I could pay a property manager to price the apartments?

Ben Lukes · Answer

Yeah, I would just look at rents on Craigslist, but there aren't a lot of similar properties with listings nearby...the good thing about this is that it probably means that vacancy is low.

Corey Smith · Answer

I would think that if you found a PM you felt like was trustworthy and knew what they were doing, it would be worth the fee they'd charge for their consultation, especially if you weren't confident enough in your ability to analyze all that on your own.

But, like others have said, you can likely gather rent ranges by searching online. And if you have the ability to estimate costs of repairs on your own, that would take care of that part of it.

This is something I'd be interested in learning more about to. I have one rental, which is across the country and managed by a PM ... but via accidental landlording.

Ben Lukes · Answer

Very true.  I took a look at the link you sent, and it is very encouraging.  The payment standards in my area are $980 for a 1-bed and $1,175 for a 2-bed, whereas the property is currently charging about $750 and $850 respectively.  Pretty darn good spread.

These are the maximums that HUD would pay in the area for section 8 housing?  Makes me wonder if the units in this property are sub-par.  I haven't seen the interiors yet.

Getting a property manager to tour a prospect with me?

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