Long Distance Property Management

[Jared Lasko]

Hi there! My name is Jared and this is my first post on Bigger Pockets!

I am a 25 year old investor in Reno, NV. I currently own a single family town home in Reno. I am looking to buy a duplex-quadplex for my next investment now. If you don't know the area, Reno is EXTREMELY hard to follow the 1% rule. I got lucky on my townhouse because the gentleman was getting foreclosed on and I happened to get him at the right time with the right offer. However, even with duplexes and up you can get close to 1% but it is very hard and very rare to find these properties.

Due to this, I have been researching the Las Vegas market instead. It is much much more favorable with much better options to make money. The only issue, is that Las Vegas is about a 6-7 hour drive from Reno. However, we do have cheap flights that run about 12 times a day.

Does anyone have any experience in managing properties from afar? I have also been looking into a property management firm in Las Vegas as well. It has really great reviews and without personally speaking to them, seems to manage a lot of properties. They do everything from tenant screening, to evictions, to showing up to court. AND, they only charge 8% (which would still be making me more money than rentals in Reno!). Is this too good to be true? But with having a property management, that would put 95% of my issues at ease with being so far away.

Any comments and wisdom would be greatly appreciated!!

Thanks!

[Casey Powers]

From my experience, small multis in Las Vegas in good condition, are rare, yes. So many of them have been passed around without ever getting fixed properly. What's been happening with so many of these buildings:

Investors walked away from them during the last crash, and they became squatter filled disasters. Other investors bought them cheap, band-aided them, put in whatever tenants, and flipped them. Next investors bought them turn-key and realized they were a constant repair problem, then sold to someone else. Next buyer does the same - realizes all the repair problems and sells. Appreciation in the last few years has allowed investors to keep buying and selling them (usually) without losing money. Prices have skyrocketed lately, with investors from out of state paying high prices to obtain properties in Opportunity Zones. (Most small multis here are in Opportunity Zones.) 

Rents have NOT kept up with prices on these properties. The neighborhoods are crap. Crackheads and vagrants taking dumps next to your fence. Hookers doing their thing next to your dumpster. Cops breaking through your fence at night to surprise the drug dealers living in the building behind yours. I have dealt with all of this and more.

You can only improve an individual building and raise rents so much, when it's surrounded by a bunch of crap buildings in crap neighborhoods. You have to rely on other investors to do the same, to really raise the value of the neighborhood. There are plenty of good tenants with lower income, but they can only afford so much rent, and you can only attract people at a certain income level to live in crappy neighborhoods. 

In my opinion, these buildings are mostly overpriced for what they are. They would be put to better use if they were just demo'ed and replaced with condos etc. 

Yes, I think SFR is a better investment in Las Vegas. Fewer repair expenses, lower turnover, and better appreciation value over the longer term = better overall ROI. I used to manage a bunch of multifamily buildings as a property manager, and I got rid of all of them because the constant repair problems make them not worthwhile for me - if they cost me money to manage, they probably cost you money to own!