Questions for managing properties out of state.

[Michael Lopez]

New here and also new to real estate investing! Learned a lot just lurking but took the leap and getting started now. 

So I plan on investing out of state and finding deals and using lease options. My question mainly comes down to managing the properties. I do plan on hiring a property management company, but I was wondering do they host open houses? Put for sale by owner signs up? Also when it comes down to signing the contracts. Just trying to get a general understanding of this part of out of state investing. 

[Andrew Bang]

Each property manager has different services, but each thing you asked about is common for all property managers,  they will market the property, put up a sign, and handle the contracts.   For rental open houses, they are not very common, the main purpose for open houses is for Realtors to find potential clients rather than sell the property they are sitting at.  

[Michael Lopez]

Thanks for the timely reply! Good to know those are all common besides the open house. 

[Daniel Goodman]

Hi Michael - as a Property Manager myself most worth their salt will do what you are looking for and have it included in their management fee. Depending on where your home is they should handle everything from setting up showings and procuring you a tenant (through relationships with listing sites and signage), tenant screening, pet screening (if applicable), handling vendors for repairs and maintenance, utility set up, property inspections, collection of rent and disbursement of income to owner, etc. Finding a tenant is a separate fee from the monthly management fee and varies by area.

[Drew Sygit]

@Michael Lopez you should be asking tougher questions than those!

Why do you care if a PMC does open houses? All you should care about is how quickly they rent a property out, for how much and how well they screened the applicant.

Same goes with "for sale by owner?" signs. Why should you care?

See below...

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊