Managing Properties from far away

[Edward Schenkel]

i am considering making an investment on a property on the other side of the state or in another state altogether. Does anyone have any experience managing properties from far away? Also, you never know what the future holds - lets say i move to CA in 10 years and i have an investment property in CT. For those of you who successfully manage properties far away, what do you advise? What if you have a problem with the tenant? what if you have a major problem with the property? do you employ a manager or management company? If so, what do they typically charge?

[Andrew Johnson]

Edward Schenkel Prevailing costs and terms for PM are highly localized. I pay 10% of gross rents but if I moved 30 miles in either direction (where I invest) I'd be at 12% or 8%. The market is the market.

My advice (and others will disagree) is that if you are managing a PM remotely you have to focus on the big stuff. And, frankly, that boils down to vacancy. If my units are full it doesn't matter if I pay $20 to change locks or $99. The $79 is just a drop in the bucket and I'd posit maybe an average of 10% of gross rents for a single unit. Conversely, another 2 weeks of vacancy on even a low-dollar $500/month apartment is $250 in collected rents. My advice, focus on collecting the additional $250 and don't worry about the $79.

I see a lot of people get bent out of shape and think they are getting screwed by a PM company with repairs. Maybe they are, I don't know. Maybe my PM gets a kickback from a contractor, I don't know. I hope it doesn't happen but I can't waste time trying to audit and use 20/20 hindsight to guess what a PM should have paid. It doesn't make any sense and hindsight arguments aren't exactly fair to the PM either.

All of this is to say that you should get used to the idea that maintenance costs will be higher than you doing the work yourself or (in some cases) sourcing the vendor yourself. Right or wrong doesn't override the pragmatism that it's going to exist.

If your DNA is such that you get small heart attacks if you think you could have saved $10 on HVAC service by using a coupon you found a week later...don't invest remotely and don't use a PM 😊