Do I need a PM for an out of state 4-plex?

Question

Hi BP Members,

I'm in the process of acquiring my first rental property. I am purchasing a 4plex in the Phoenix area and live in Los Angeles. Tenants have been there for 3+ years. Do I need a full time property managent company or can I use a handyman on retainer to handle the small things that come up monthly?

I do plan on making trips at least twice a year to the property.

Thoughts?

Account Closed · Answer

Hi. Right now, I don't think you need a property manager. Since those people have been there for 3+ years, they may be there for several more. So, you don't need anyone to show the property, just someone to make repairs when needed. I would just hire a handyman when you need one. I would even hire him to drive by the property once a month (or week) just to make sure everything looks good. Since you are going twice a year anyway, you can inspect the inside at that time.

Once these people give notice or you start having trouble collecting rent, then you should get a property manager.

Lawrence Ratliff · Answer

Absolutely!  Maintenance on the property is the least of your worries.  It's the tenants you need to worry about.  Marketing to new tenants and pre-screening them, showing all the window shoppers the property etc. and the legal issues, how to evict properly, your rights as a land lord, their rights as a tenant...every state is different.  Property Management companies help alleviate these issues.  You won't have to pay much for good property management and your quality of life will be much better.  Also, a good PM company pays for themselves, getting top dollar renters in quickly with widespread marketing, collecting late fees, pre-screening, and doing tons of busy foot work you would have to do yourself, your time is much better spent adding value to your investing than doing admin PM stuff a good PM company can do for you, for little money.

Kimberly T. · Answer

I highly recommend getting a PM. We own two fourplexes in the Phoenix metro, and have a PM for them. I do not want to think about how many more times we would have had to go out there if we did not have a PM.

Anthony Gayden · Answer

I am in a similar position. I live about 3.5 hours away from Phoenix, and own a 4-plex there, and honestly, I'm not sure if I could do it without a property manager. I personally believe that they are worth the cost, and I did all my calculations before buying including the cost for one.

If you only plan on seeing the property twice a year, it sounds like you will need a property manager.

Account Closed · Answer

I concur, I don't see how you could manage a remote property.  Make sure you find a good company though.  Someone who won't overcharge you for repairs when they're needed.

Annunciata R. · Answer

I agree with Michelle Na Alot of suggestions for a property manager on this thread have been based on how you will replace a tenant. It goes without saying that when the time comes then a PM could step in. But to put a PM permanently for the sake of when a tenant may leave doesn't seem prudent. Even then, I have known PMs simply to shove the first thing that walks through the door simply to get their commission causing you even worse headaches.

At the moment I have a commercial unit up for lease and the phone  number on the unit is mine. When a prospective tenant calls I will vet the tenant over the phone. Only when I am happy with them that I then pass the tenant to my PM/RE Broker to proceed with the viewing.  I have been able to reject a lot of people wanting to run a hair salon in a space that I was targeting for desk based businesses.

The same applies for residential, you need to have an element of involvement in your own properties to learn a thing or two about the business. The problem exists in the frequency of your visits/distance. Overall, and in my own experience I have achieved better rents and better tenants by being my own Project Manager. On the down side I have spent more time than I would like, managing my own properties.

Ramon Jenkins · Answer

I would suggest a property manager

and good local real estate attorney

Tom Yung · Answer

@Austin Hajjar

an out of town investor myself, I will strongly suggest you have a good PM.

late rents, repairs & maintenance all will pop up occasionally.

It is a ton of work comparing whatever they are making(6%,8% or 10%). Ask them questions of their service & responding time to both you & your tenants when issue arises.

To me, It is just not an issue of Managing the day to day Four tenant issue. It is the issue of how to manage your PM to manage your tenants.

Rhett Tullis · Answer

as a PM I know that having one will not solve all the issues and a poor one will cause more issues but if done well it is a lifesaver.  I get calls weekly from out of state landlords looking for help.  often they are thousands of dollars in the hole by the time they get to me.

Austin Hajjar · Answer

Thank you Lawrence very good points

Do I need a PM for an out of state 4-plex?

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