Possible to self-manage out-of-state properties?

Question

Does anyone manage out-of-state properties without hiring a property management company?

All of these issues seem fairly straightforward to do remotely:
- Listing property online
- Collecting rent
- Scheduling contractor/handyman for repairs
- Coordinating self-walkthroughs if there's a smart lock system or coordinating with previous tenant on tenant turnover

How would people manage these issues?- Setting up keys and key access.        - Having a smart lock to remotely change key codes and give access to potential tenants, contractors, switchover of tenants, etc. would all be nice. How would you set this up in the first place if you aren't in person when you close on a property? Also, a smart lock would require Wifi to already be set-up so I see this method working for a STR but not a LTR.- Any other issues that I'm overlooking?

I would need someone on the ground for dealing with the issues mentioned above. Any recommendations on how to find someone for these simple tasks?

Nathan Gesner · Answer

This question is asked approximately 17.2 times per week and the answer is always, "It depends."

How much time do you have?

Are you capable of learning the law and staying current on it?

How well can you monitor the market and keep your property at market rate?

Can you handle difficult tenants from a distance?

How will you market the home? Show it? Handle periodic inspections and turnovers?

There are a lot of questions to ask. You'll find many on here that say they do it better than a local property manager could do it, but I suspect there aren't many instances where that's true. What I see are a lot of Landlords that manage very well on their own...until things go sideways. Then they come back to Biggerpockets begging for advice, attorney recommendations, etc. I manage about 400 rentals and over half my owners used to manage on their own . . . until things went sideways and they got tired of losing money. The majority of them make more money after paying my fees than they ever did on their own.

Give it a shot. The worst that could happen is you lose a bunch of money.

Travis Timmons · Answer

We started with a property manager and then moved to self managing. It was our way of proceeding with training wheels as it was our first property and we were a little green. After the first year, we opted to self manage. The one factor that made it work for us is that it is a furnished rental listed on furnished finder, and we have never had to show the property to get it rented. The biggest limitation in self managing from a distance, in our experience, was finding tenants and showing the property.

We do still fly up to turn over between renters even though we have some good boots on the ground to solve problems. As far as finding those boots on the ground, facebook groups and taskrabbit have worked well for us. Good luck and let me know if there is anything that I can do to help!

Wale Lawal · Answer

@Jake PickettEven though owning a rental in a different market can be challenging, here are 9 things you can do to help make managing rental properties out of state easier.1. Monitor the local real estate market2. Create a go-to list of trusted service people3. Purchase a home warranty4. Automate rent collection and maintenance requests5. Perform routine inspections6. Network with the neighbors7. Stay organized8. Schedule time to visit the property9. Hire a local property managerIf the previous 8 steps seem a little overwhelming, as an investor with an out of state property you can always hire a local property manager.

Managing a rental property out of state can be challenging, but it’s also doable when an investor takes the time to plan ahead. Creating a network of dependable service providers and purchasing a home warranty are two ways to handle repairs, while conducting periodic property inspections can help catch minor problems before they become big. Offering a tenant a way to make rent payments and repair requests online also makes managing an out of state rental easier. Another option for managing rental properties out of state is hiring a professional property management company. A good property manager will take care of the day-to-day issues, allowing an investor to focus on scaling and growing a rental property portfolio.Here is a detailed article https://learn.roofstock.com/bl...All the best!

Justin Gabriel · Answer

It is possible. And as others have mentioned, it depends on your goals and risk tolerance.

We have been self-managing our out of state properties for 2+ years. We've dealt with noise complaints, remodels, HOA issues, etc. remotely.

We interviewed a number of property managers in the area and found they didn't seem to care about our investments as much as we did. YMMV. And as new small independent landlords, our margins were already thin so we decided to develop our own systems for finding tenants, pricing units appropriately, handling maintenance requests, collecting rent, and tracking finances. Having a handyman for on-site requests and verification was a key piece to the puzzle.

We're looking at our rentals as a business that we want to grow, so we were ok with spending time developing these systems. Plus we really care about the tenant experience so we wanted to get a feel for handling their requests. YMMV based on the class of area/property, as well as if you're looking for a truly hands-off experience.

As other have called out, there are pros and cons to self-managing and hiring a PMC. Be honest with your goals, time commitments, risk tolerance, etc. It is possible to self-manage out-of-state property.

Jake Pickett · Answer

@Nathan G. That's awesome advice. Thank you.

Makes sense that your systems are truly revealed when you end up in a bad situation. Self-managing is "fine" until things go sideways.

Those are good things to weigh, and I'll continue to research depending on the market I end up in.

Julie Hartman · Answer

Everything @Nathan G.said is spot on. Many of our clients were acquired after they tried to self-manage and things went pear shaped in a hurry. We would then need to untangle the plate of spaghetti we were handed. Taking over a rookie landlords bare-bones lease and a troublesome tenant is not easy. As he said, you can avoid a lot of the pitfalls by doing a good job of screening and having a solid lease and systems in place to manage from a distance. It may be worth it to hire it out for the first year until you master things, then take it over full time yourself.

Patricia Steiner · Answer

It is possible and my clients and I self-manage.  My firm has a proprietary process for doing it and you could certainly create your own. It's important to know that having a PM might be the best option for some investors but it doesn't mean that you're not managing.  The investor needs to proactively manage the PM to ensure maintenance costs are low, that vacancies are viewed as cash left on the floor - and filled immediately with qualified tenants, and more.  Whichever you go, it comes down to actively managing your business.  Hope this helps...

Drew Sygit · Answer

@Jake Pickett

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

Good luck with whatever you decide😊

Steven Foster Wilson · Answer

I think the bigger question is do you want to grow? With not hiring a PM then that could limit your ability to scale. If you want to keep your business growing then you have to have systems in place.

Joe Martella · Answer

I would say that the neighborhood depends on PM too. A/B+ neighborhoods may be easier to manage out of state than C/D neighborhoods.  I wouldn't try self managing rougher neighborhoods as they need more attention that  I can give.

Possible to self-manage out-of-state properties?

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