DIY Remote property management - is it possible?

Question

My husband is from upstate New York and he has an uncle who's triplex is up for tax auction .  He doesn't want  much at all for the property; just what he owes in taxes plus a little extra.

We have run the numbers and done our homework, and it seems to be a steal of a deal. The only kicker is that the triplex is in NY, and we are in TX. It's in a small town with no property management that i can find. I called a few realtors, and everyone says they manage their own properties in that town. I've called companies in the larger cities nearby, and no one will touch it because it's too far.

My question is how feasible would it be to manage your own property remotely? What are the risks to doing so? This is our first rental property. Any input would be welcome.

Luke Grogan · Answer

I have a couple of SFR that are over 1000 miles away and I have self managed them. Two keys for me: get to the unit, bulletproof it, handle everything in advance! Use high flow toilets, snake the plumbing, replace the water lines that drain to the sewer if they are old, tile or cheap/sturdy laminate, Landlord Locks, or easy to re-key locks and get them solidly rent ready.

Work with a few realtors to list your property, but once they past the sniff test, i.e., 3x rent as income, no current collections, etc., etc., then I interview them, get to know them, ask any question that comes to mind and make sure they completely understand that I want my tenants to love their home and feel totally comfortable, but if rent is late, I will never waive late fees (but I have twice for circumstances that required flexibility) and I will evict at the first sign of a problem. It's not personal, it's just how I HAVE to run my business.

Choose a realtor to list the properties and let them know that if there is a problem, part of their fee means that you will also call them to post the three day notice and help with any potential eviction as well as turn. Have them walk the tenants through the pre and post rent inspections and stay in touch with the agents periodically to keep the relationship if you need it.

From there, you will pay higher maintenance costs unless you are able to get good handymen recommendations from your RE agent. It's very doable, but will cost more at times. But, you save money, if you buy right you make more money, and you can afford to make sure most of the potential problems are handled up front and if you screen tenants, you will be fine. Just know a headache will eventually come, but a plane ticket isn't that much in the grand scheme of things...

Levi T. · Answer

If the price is crazy good, don't pass it up. Worst case is you sell it for much more than you paid, just make sure your getting a crazy good deal. If a landlord cant pay his bills, that tells you a lot about the property sometimes, or their mismanagement.Find yourself a real estate agent (Hit up Craigslist), pay 50-65% commission on new leases, and have them do the walkthrough on the entering and exiting tenants, they will email you photos, etc. Open the yellow pages and start getting vendors for plumbing, handyman services, etc. A little trial and error, and you should be alright. You call/email vendors, and handle payments and collection notices. You have have vendors and attornies handle the legwork for you, tho you could pay the agent an extra hundo to do the court thing as needed. Once per month or so, you need the agent to roll by the property to give it the old eyeball from the outside. That's the dumbed down version, but you get the idea.

I have successfully owned properties for years that I only would see once every year or so. You just have to have vendors do what you want, and pay for it. For those doors I run $155 per door in repair cost, vacancy is sub 5%, but never eclipsed 10%. Good luck!

Jeff B. · Answer

I am an absentee owner with property 2hrs away (120 miles, see profile).  I did all the management but had a local team of trusted craftsmen/contractors to perform the heavy lifting.  I did the leases and move-in/out inspections where the leases were 3 months, reverting to m/m.

It worked for me.

Jennifer Sisson · Answer

Thank you @Luke Grogan, @David Faulkner, and everyone else for your advice! It's been very helpful. I'll let you know how it goes.

Luke Grogan · Answer

@Jennifer Sisson Sounds like that's the standard rate for PM without any of the PM services. I'd call around and specifically state that you are managing it, but need an agent to get it listed on the MLS and do the first screen and the credit checks. They will keep the application fee to cover their screening costs and I pay 50% of the first month's rent, but I think 75% would be reasonable. Possibly up to 100%, but make sure that you have final say over tenants and not just accept whoever they put in.

The biggest make/break is tenants and cashflow, IMO.

The other thing is make sure you talk to you Uncle and let him know how much you want to make it work, but if it just can't be done remotely, you will need to sell it. He shouldn't be overly concerned at this point if he's just letting it go based on back taxes! He should understand what's at stake...

There is some good advice here on this thread. Just go in eyes wide open, screening it as realistically as possible. Also know that problems will come and make sure you are prepared to pay for them or worst case, fly out and deal with them...

David Faulkner · Answer

One other important factor not mentioned is the quality of the neighborhood ... if it is in a desirable neighborhood, that may be doable. If it is on the rough end of town, then those tenants will require more active management, no way from out of state ...

I agree with others to make sure it is a great deal and if so, go for it ... if remote management doesn't work out, then you can likely still sell for profit. If it is in a rough neighborhood, sell for profit should be plan A, not plan B IMO.

Jennifer Sisson · Answer

@Aqil Dharamsey The property is in Schoharie Co, NY. I have called places in Albany and Amsterdam, but no luck. I might try Oneonta, but that's even further.

@Mendel Lazaroff I agree that the best option in this case would be a straight flip to just sell it, but the uncle would like to see it profit a family member long term. That said, I would have no problem trying to manage it and if it became a headache, then turning around and selling it. I would not have the uncle manage it because the reason it's going up for taxes is that he is very soft on late rents, evicting poor tenants, etc.

@Luke Grogan I did find one realtor that was willing to "manage" the apartment for me, but she said she would just list it and do showings, but all maintenance issues would not fall under her responsibiliites. She wanted 10% of the rent price, as well as 1 month's rent for a tenant placement fee each time she got a new tenant. I'm obviously no expert, but it seems like that is full price for property management, but she would only be doing half the work of a typical property manager. Or is that just the cost of doing business remotely? Thoughts on the pricing?

Thanks everyone for all the advice. This really helps!

Stephen E. · Answer

@Jennifer Sisson Managing remotely from that distance is a high risk enterprise. Landlording is a hands on business and there are a lot of unforeseen events. This property seems to be cheap but a low priced property will not compensate you for insoluble management headaches if you are so far away. if you want to buy a building, buy one you can drive to within half an hour. What are you going to do if it takes longer than expected to find a tenant? Who is going to handle all of the showings? What if a pipe bursts at 2 am? There are easier ways to invest in real estate than to pick up distressed property in a land far, far away.

DIY Remote property management - is it possible?

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