Managing first rental property from out of state.

[Rahul Gupta]

We are planning to have a SFR as a rental property in St Paul, but we live out of state. What will be the best course of action to manage the property? Would a property management company be the best or should we try to do it ourselves?

We do have a home warranty. Any suggestions will be helpful and appreciated. 

Thank you 

[Jim K.]

Remote-managing a property will always look like a great idea until it does not. It may work out for you for twenty years -- it really does for some folks. You may crash and burn in a month. But I would look at having that property managed professionally from the start and not tempt the Devil.

To date, I have bought only one remote-managed property from an out-of-state owner. He owned his C-class duplex for eight years, a very good run, until one of his tenants stopped paying the rent and sewage, and then convinced the other one to do likewise. He was $5500 in the hole with the first tenant and $1500 in the hole with the other one. The big surprise for him was the lienable sewage payment. He tried to pass this expense on me on the downlow, and when my closing company caught it, he flew into a rage, but in the end, he had to pay up money he really didn't have.

He bought the property for $74K in September 2012 and sold for $110K in December 2020. Each apartment currently rents for $1100. Turned out to be a great investment for me, but he lived six states away and I live one street away.

I am currently looking at a C-class apartment building here in Pittsburgh where the owner seems to have moved to Florida part-time and is trying to remote-manage his property through tenantcloud.com. This place is obviously being run into the ground. I hope to snap it up cheap.