Out of town rentals?

[Michael J.]

I've noticed several of you mention you buy rentals out of your town and state. How do you manage the rentals while living in a different state? Do you use PM primarily? How does that work for you if you do?

I really like the idea of buying in different cities, for one thing I love to travel when I get the chance but more importantly you can pick out specific markets and don't have to wait for your own backyard to become workable.

What do you usually pay in PM fee's and how do you find a good PM? RE agent recommendations?

[Will Barnard]

All of my rentals or out of state and property managers are used on all but two of them. If you plan on duing multiple investments in the same area, I suggest you make the effort to interview several and get references. Usually, full service PM charge 8%-10% of collected monthly rents plus a one-time placement fee ranging from 25%-75% of 1st month's rent.
All of this is negotiable as are all the items in the PM agreement. When you have multiple properties in one area, always ask for the "investor's discount". I never pay more than 8%, and never pay for the PM to arrange for repirs/maintenance as that is part of their 8% monthly. Many of them try to stick you with additional expenses. You should never agree to them. The contract between you and the PM is the single most important aspect.

Also, make sure you include verbage in the contract that states you reserve the right to cancel the agreement with 30 days written notice. This allows you an out in the event that you are not satisfied with their services.

Many PM will argue that the contract theu use is the "standard" contract and was written by the best attorneys i the state. That may be true, but it was written on their behalf and not yours.

Get educated on contracts and how to protect yourself. Use an attorney if necessary. Remember a PM can make or brake your investment.