Property management question for remote property

[Jitendra Mandalia]

Friends,

I have invested in a single family home in Virginia and I live in California. I was planning for a property management to be done with a company local in Virginia. Though I have another realtor, who is a friend of mine, and willing to do property management for a cheaper rate, who is also local to the city. This being my first property, I would like to know if it is better to go with professional company to do property management or go with single person. He is good, and willing to and able to support as needed. Though with him not having official license for property management, all the contract and documentation will be done through me as an owner, and he will be behind the scene doing the regular management. The difference is almost $900 per year in cost. He has already helped me finding a tenant. So he is good in his service.

Though being so far from the property, I am bit leaning towards going with professional company to manage any worst case scenario with tenant. 

Do you have any suggestion?

Thanks.

[Anna Sagatelova]

As a PM, I think that there is a legal way to do what you are proposing. I am not familiar with Virginia's laws, but you are essentially using your friend as an employee of your property management business. Work with a CPA/attorney to properly arrange payment.

Just be sure that your friend really does have the knowledge and processes to deal with ALL the things that come up in the course of property management. Finding tenants isn't hard; properly screening them, however, takes experience and procedure that usually takes years to build. And you won't find out if they were properly screened for a little while...

Also, nobody likes to hear this, but you are mixing business with friendship, and unfortunately things can and do go wrong. Are you willing to either lose money to preserve your friendship, or lose your friendship to save your business/prevent losses?

Property managers are great because they're the ultimate third party, and it isn't personal. That holds true for when they are enforcing your lease agreement as well as if you have an issue with their performance.