Distance from property as first-time landlords

[Colleen Martin]

Hello!

My husband and I are negotiating what could potentially be an awesome deal for a 6-unit rental property. Obviously there are a lot of financial aspects to this decision that we are working through, but I have a non-numbers question.  My main concern is that we currently live just under two hours from the property, and I'm wondering if that may make things difficult. I lived in this property for about a year (which is why I know the current landlord) and have some experience with it. When I lived there we had almost no maintenance issues. I understand that involving a property manager could remove this quandary, but for now we'd like to manage it on our own (for experience as well as monetary benefits). I'm not bothered by driving itself, but I don't know if the minimum two hour delay in getting to our tenants for anything may have significant consequences. For current landlords, what's been a manageable radius from your residence in your experience? Any advice would be much appreciated!

[Nathan Gesner]

I think two hours away is too far for a novice. How will you show the property? How will you inspect the lawn or deal with parking complaints?

A property manager "takes" 10% off the monthly rent but they can save you thousands in lost income. You can start by going to www.narpm.org and search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addendums. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance or problem tenants. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

I hope this basic guide helps. If you have specific questions about property management, I'll be happy to help!