Ask PM if they'll manage BEFORE buying out of state???

Question

I know it shouldn't be a deal-breaker, if the mgmt co doesn't want to manage a C/C- property, but do you contact them before you buy, just to see what their thoughts on managing it would be?

Oren K. · Answer

It's funny how different people approach issues; we have one PM happy to connect with potential clients, point them in what they feel is the right direction and in general want to be helpful. Then you have another PM whose attitude is a bit more shall we say mercurial and unless there is potential pay check involved is not will in to spend a few minutes to help someone.

If you have a property under contract, who do you think would would be better to work with? Might warn you off an area that they know is not good? Would take the time to educate the OOS client on local issues to watch out for? To each their own.

To answer the OP question; I think they go hand-in-hand. If you are focused on a particular market, then finding a PM before the property is a great way to leverage the PM's network and knowledge base. As an OOS investor and on the assumption that you don't want to manage remotely, then you need to lock this down during the DD time at the latest. One unplanned trip to a property can wipe out a lot of profits once you factor in plane, hotel, car rental, etc.

Kim Younkin · Answer

@Mark Douglas, talking from the PM side (I work for an investment realty and PM company), we would advise you to call us first. We talk to a lot of BPers who are buying here in Columbus OOS, and we tell them where we like to manage, giving them a rundown on various areas of town--which we hope will help them when they're deciding which area to buy in. If our sales agents are helping with the whole buying process, we won't help them buy in an area we won't manage in. I think if you call PM companies who have been around for awhile in your area as you're getting ready to buy, you can get some great information from them--especially if, like our company, the owners are local investors themselves. Good luck!

David Faulkner · Answer

You mean local PMs referring you as a customer to other out of state PMs? ... if so, no I would not trust that unless you have a long standing relationship, major trust with your local PM, and they have direct experience dealing with the other PM they are referring. Otherwise, there could be a referral fee or other things that would bias the referral. I think it is best to get a referral from somebody who has zero conflicts of interest and whose only interaction with the PM is as a satisfied customer over a long period of time. You build your team around your PM, and if the quarterback of your out of state team is bad, then you are absolutely hosed, so spend your time to pick them first before anything else. I'm an experienced investor and have tried for years to find and maintain good PMs, but have not had any luck, which is why I generally advise against OOS where you will be 100% reliant on them. If you do venture out of state, pay up to get into the nicer B/A- neighborhoods which are far less management intensive, even if the day one cash flow numbers don't look as good on paper ... my experience is that it will be money well spent in the long haul. Good luck to you.

Account Closed · Answer

I have two properties in Evansville, IN - I bought both THEN looked for a property manager.  The first property manager looked at both homes and one of his comments were "I don't know - the window frames have a lot of paint on them".  I seriously rolled my eyes on the phone...and it instantly gave me an insight into the type of person I was looking to hire.  The second company I called never returned my calls...and I thought to myself how frustrated I would be if I were a tenant and were treated the same way.  The third was based on a recommendation from another BiggerPockets member and she and her crew have been great.

I have another property in Ft. Morgan, Colorado.  I started rehab on the house and three months later, before I was done with rehab, I started looking for a property manager.  First manager I called kept promising she would go to the property (I had a lockbox on it) and let me know her thoughts.  She kept calling back, but she never showed up.  Second property manager I found has been great - interestingly enough, (it's a small town) she also went to high school with the guy I bought the furnace and water heater from and the guy I paid to replace all the windows.  They waited another two months before I finally got the property ready to rent and I've been very happy with the service they provide.

In all three instances, it was after taking possession of the properties.

I am currently talking to a real estate agent in Cleveland that works with investors and apparently has all kinds of connections with contractors and such.  I have a call with him in the morning - not sure if he is a property manager or not but it may be the first time I approach from the other direction.  We'll see what happens.

Kim Younkin · Answer

Our company knows Peter and would recommend him for PM in his areas, but his company doesn't do sales. So, this is a good point to be made for @Mark Douglas, which is that there are different types of PM companies. If you're calling Peter whose sole business model is PM, they're busy people, they're managing, they're going to look at your property when it's contract because if they didn't they'd be running all over town all day doing what agents do when that's not their business model. Our business model includes both, which is why our perspective is what it is--no better, no worse.

Peter Lohmann · Answer

I'll give a different perspective. Please don't call my office asking if I can tell you "a little about the neighborhood" or asking "what are some great neighborhoods to invest in Columbus?" Not interested, unless you want to pay my consulting rates. I have current customers to attend to who pay for and rightfully expect my attention to be unwavering on them, their properties and their tenants. Once you are actually in contract on something, I'll be happy to take a look, but don't use me as a "tool" to help you invest in real estate.

Mark Douglas · Answer

@Matt W. thanks Matt!

Mark Douglas · Answer

@David Faulkner I see where you're coming from. Do you trust the referrals that they give you?? Wouldn't the PM give their best customers/owners as referrals? It seems like there would be a few properties that could fall through the cracks if they're managing hundreds of units, no?

I have a couple of units here in town, and I'm working on some more. I'm not saying there aren't any opportunities here, just keeping my options open :)

I have a couple of units here in town, and I'm working on some more.  I'm not saying there aren't any opportunities here, just keeping my options open :)

Ask PM if they'll manage BEFORE buying out of state???

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