Advise for managing property of out of state

[Don Aleshire]

Hello, wanted to get peoples thoughts on long distance rentals and how I should best prepare --

I have two 3 unit buildings in Chicago that I have owned for several years. We started house hacking back in 2018 and lived in one unit for 5 years. Prior to our first son being born, we purchased a second 3 unit building and currently house hacking that for the past 2 years. 6 units in total with us living in 1 of the units today. All long term tenants with 0 turn over (so far). My rents are a bit below market rate but no tenant turnover is nice.

My wife and I are looking to move out of Chicago to San Diego in the next 12-18 months. We are currently making roughly $1k per month house hacking all units and would earn a bit over $4k per month with all 6 units + garage spots rented out (Rental income - PITI). Total value of the 2 properties is roughly $1.5M and I have close to $600k in equity.

The buildings are both 100+ years old but I have done my best to do capital improvements over the past several years. Updating pipes, electrical boxes, roofs, appliances, etc. I also have a good network of people I trust (electricians, plumbers, painters, roofers, etc) but I do not have a reliable handy man. I typically do most small jobs myself or find random handymen who do a decent/poor job.

All leasing/property management is done by me today and I think it will remain that way in the future, even from afar. I would farm out my local friends/baby sisters to help do showings if a vacant unit arrises. I also thought about leveraging my Chicago network (friends + neighbors) to keep an eye out of the properties from time to time. All tenant issues would still come directly to me via text/email/call and I can be the middle man to broker the communication with handyman/repairs/etc.

I have handled issues remotely before in the past while on vacation for a few weeks (pipe burst, sink clogs, broken appliances, etc.) While not fun, I have managed to get through the issues and returned home to everything being solved.

My biggest challenge is finding a handyman I can trust for simple/small/medium jobs. How have you found handymen in the past? Where have you found success finding them? Any details you can provide would be helpful.

Since I have the next 12 months to plan for this, I am open to any additional feedback/suggestions on what else I should think about. Based on the cashflow, I think it makes sense to hold onto these versus sell but again, open to ideas. Thanks!

[Krystyna Schexnayder]

Hi @Don Aleshire, 

I think its super awesome that you have had zero tenant turnover, which in the grand scheme of being a landlord is half the battle! Congrats! :-) 

From a property managers perspective, I also think its great that you've decided to take on out of state self management for very legitimate reasons...Nothing is void of a few challenges, as we can all attest to, so as you embark, I wanted to share a few top reasons our owners choose to hire a management company. 

- As @Jonathan Klemm mentioned, passing on this load so that you can be more present and attentive to your family and not be essentially working  24/7, on-call for the needs of tenants and property emergencies... can be worth the management fees. 

-Being able to give your tenants the professional experience of timely responses, quick attention to maintenance, using the on-hand already vetted roster of vendors, providing a sense of formal hospitality and customer service... can be worth the management fees. 

- Staying compliant with various tenant laws and fair housing policies is also a big factor I hear a lot. Some of our owners have accidentally thought they were handing a situation "right", and because Chicago is a very tenant friendly city, the laws tend to lean in their favor, and it can cost you a lot if you are simply just not up to date on what is proper protocol (for example, what to say, what not to say, what to have in writing, and what not to put in writing, etc)... can be worth the management fees. 

-Maintaining your anonymity! Being able to create separation between you and the tenant, can be very liberating; you have an opportunity to stay "the nice guy", while your management company absorbs all the hard conversations, and enforces the rules... can be worth the management fees. 

-Rent collection and financial management is probably not at the top of the list based on some of the challenges that we hear about, mainly because if you are lucky enough to have solid tenants and low vacancy, this is easy peasy, but if you have some challenging tenants that default on payments, or the possibility of an eviction arises, it can be worth paying a management company to help guide next steps. 

I know this was long, but all the best to you, and I truly love this BP community, because these conversations are so necessary and helpful for a huge spectrum of industry professionals, new and seasoned!