Long Distance Management

[N/A N/A]

I am planning on buying a small multiunit place out of state since prices in my area are too high. I would like to minimize the cost associated with managing the property and am willing to do as much of the work myself as possible but it seems like most of the work has to be done by someone local. Any suggestions or advice from anybody that has owned out of state property? Are management companies the best way to go or are there any other options? Thanks.

[Jeff Takle]

Hi. This is precisely the problem I've faced. I live in Boston and now own a bunch of property down near DC and elsewhere. To fix the problem I developed (because I'm a bit nerdy) some software tools to do much of the management. Here are my lessons learned:

Most of the functions can be handled via a web interface: advertising, rent, tenant screening, maintenance requests, applications and forms, etc. You will ultimately need somebody on the ground to let prospective tenants in the door and to verify that the painter in fact painted the place. Try real estate companies;realtors. If the big companies balk, seek out the small mom-and-pop brokers. If they balk, then call plumbers and handymen. Tell them the situation and make a deal. Most of these guys will work after hours for a fee. To be safe, you may want to check the KY real estate license laws and limit the scope of what you ask them to do for you.

1. Establish a network. You don't have to have your own plumber, electrician, handyman, etc. that you've worked with for years. You just need one you can trust who will give you a reasonable price. Identify them, call them, and see what you can arrange. When in an area I don't know "Bob the plumber" I just go with national companies like Roto-Rooter. They're not the absolute best in quality but they are reliable. You need to do this for water, electric, HVAC, and general handyman maintenance problems. Your tenants will know when something needs maintenance attention--trust them to help keep your place running. In other words, neither you nor a property manager need to go into a property to "verify" that work needs to be done. Your tenants aren't morons and, contrary to popular belief, they are almost certainly not going to abuse this privelege. If they do--if a plumber reports back to you that the tenants just wanted a new fancier faucet installed--you still have all the rights to deduct that from their rent as a frivilous expense covered under their maintenance responsibilities. According to the American Housing Study of 1998 (Boston & DC), the 2000 Census, and the 1995 Property owners/managers survey, over 92% of owners address all maintenance issues immediately.

2. Make it easy for tenants to pay rent. Quite easily you can establish online rental payments through a number of vendors on the Internet. Best deal is to get an automatic rent debit from a checking account if tenant agrees. I recommend accepting credit cards (more than 300,000 units now accept them according to the Journal of Property Management) as well as checks.

3. You need somebody on the ground. Sometimes this is just to hand a maintenance person the keys and to verify that the painter is done and did a good job. If you can't fly to your property every once in a while to do this yourself, then make an arrangement with a local real estate company. EVERYTHING is negotiable with them and for this reduced service from them, you don't need to pay the full fee. Also, when it comes time to advertise the place for rent, you will need someone to open the doors. Again, the real estate company is the easiest solution here, though expensive. Augment their "efforts" with advertising of your own.

Sorry so long. Any thoughts?
:groovy: