Converting my Primary into a Rental and managing remotely

[John Kim]

Hi, I am new (like absolutely new) to real estate investing and wanted to get some advice. 

I am in the process of moving to Austin from Dallas but wanted to convert my existing primary into a LTR rental while managing the property remotely from Austin. I have lived in the property for more than 3 years and we have been the only occupants in the home since it was built.
The potential cashflow isn't the best but our primary goals were to build up the equity in the home to be able to potentially purchase other properties in the future with the chance that we may return to the house in the future.

The property is in the Castle Hills area in the northern side of DFW which for those who don't know is generally a neighborhood with higher income tenants. 

1. Is it better to go with a property manager considering I won't be in the same city? Personally would love to get the chance to learn how to do it but I am a bit intimidated.
2. If I were to manage the property myself, what would be the necessary steps I should take to make sure I can do this remotely. 
3. How often should I come up to do a routine inspection?
4. Any advice on the kinds of people I should have in "my team" to make this a success?

[Ty Coutts]

Hi John,

Converting your existing home in Castle Hills into a long-term rental while managing it remotely from Austin is a feasible endeavor, but it does come with its own set of challenges and considerations. Given your circumstances and goals, hiring a property manager could be beneficial, especially since you won't be in the same city. A property manager can handle tenant interactions, maintenance issues, and local legalities, providing peace of mind and freeing up your time. However, if you choose to manage the property yourself, ensure you have a reliable system in place. Begin by setting up online tools for rent collection, maintenance requests, and communication with tenants. Establish a local network of trusted professionals, such as a handyman, plumber, electrician, and a local real estate attorney who can address urgent issues promptly. Regular inspections are crucial to maintain the property’s condition; aim to visit at least quarterly if possible, or hire a property manager to conduct these inspections for you. Additionally, having a real estate agent who understands the local market can be invaluable for pricing and tenant placement. By assembling a strong team, including a property manager, maintenance professionals, and legal support, you can effectively manage your property remotely and focus on building equity and future investment opportunities.

[Bruce Lynn]

#1.  Can you do it.  You can.  I have investor clients who manage from all over the world remotely.   For the most part I don't think it is that hard and not as hard as most people think.

#2.  Should you do it?   I would say NO, not with your house and not in Castle Hills.  Your house is too nice and too expensive to be a good rental property.   If you want to be an investor, sell this one and buy true rental properties.   No renter will likely take care of your personal property like you have.  Your rental returns will be low compared to your purchase price.  If you would not have purchased this house as a rental day 1, you shouldn't probably use it as a rental now.

#3. However you have a couple of dilemmas to deal with.  One is if you will come back and when will that be.  If there is a plan, like you're going to Austin for a year and know you will return, then I'd keep it and try to rent it.  If you told me you're going to Austin for grad school and pretty sure you will return in two years, same thing, might rent it.  If you're just thinking....well maybe some day...sell it.   It's probably tempting with your low interest rate to keep it and that might be a slight consideration, but I would still be tempted to sell it if you can.

#4.  Castle Hills is known for foundation problems.  Tenants never water like you would and they often don't report issues like you would see.  So that's another great reason to sell now, before you have foundation issues.

#5  If you still think you want to rent, you can get a PM, typically that will be about 10% a month and don't go cheap on that.  You can also hire a realtor to help you get it rented and do the paperwork and then turn it back over to you to do the PM on monthly basis.  Good to have a realtor, trusted handyman, HVAC, and plumber in your phone.   I suggest doing a basic inspection every quarter.  Change the air filters, make sure sprinklers are set and watering, landscaping done, check on cracks and leaks, visually inspect roof, also checking for pets, and how many people living there.  Plenty of people never check or only inspect property at tenant turnover.  I just think problems become more expensive if you do it that way.

[Michael Smythe]

Get a PMC or you will regret renting out your former primary residence when you see how tenants do NOT take care of it:(

[Lucia Rushton]

@John Kim I personally think you should hire a PM for the first year. Learn by observing what and how they do it.

If you want a recommendation. Send me a DM. I am here in DFW.

[Jordan Moorhead]

Quote from @John Kim:

Hi, I am new (like absolutely new) to real estate investing and wanted to get some advice. 

I am in the process of moving to Austin from Dallas but wanted to convert my existing primary into a LTR rental while managing the property remotely from Austin. I have lived in the property for more than 3 years and we have been the only occupants in the home since it was built.
The potential cashflow isn't the best but our primary goals were to build up the equity in the home to be able to potentially purchase other properties in the future with the chance that we may return to the house in the future.

The property is in the Castle Hills area in the northern side of DFW which for those who don't know is generally a neighborhood with higher income tenants. 

1. Is it better to go with a property manager considering I won't be in the same city? Personally would love to get the chance to learn how to do it but I am a bit intimidated.
2. If I were to manage the property myself, what would be the necessary steps I should take to make sure I can do this remotely. 
3. How often should I come up to do a routine inspection?
4. Any advice on the kinds of people I should have in "my team" to make this a success?

 Honestly it's way easier to manage remotely than you would expect. Set it up on a system like apartments.com that automatically collects the rent for you and find a good handyman that can help when you need it, which will not be often. I wouldn't go up more than once a year for a walk through and make sure to set that expectation upfront with the tenants. Make it about the property and say you want to make sure it stays in great shape for them.

If you have a good handyman, good plumber and electrician in your phone you'll be good to go! Don't overthink it and you won't have any problems that can't be solved easily I'm sure.

[Jennifer Volek]

I self manage my properties, and I think you can have great success by placing the right tenants in the property. If you want to spend 10% A MONTH on property management fees then yes, hire one. But i think that self managing is very simple and since your property is only 3 years old you are likely to have very little issues with the home. I always encourage people to self manage, there is a great book by Brandon Turner and his wife about managing rental properties. A realtor, like myself, can help you place a tenant with a texas lease and then you can take charge from there. You can collect rents electronically, and stop in at the property once a year or however often you feel comfortable as long as its agreed upon in the lease agreement.