How to build a out of state team

Question

What are some questions that you can ask to each of the required team members(PM, Agent, etc. ) to ensure that goals align and they are best fit.

Drew Sygit · Answer

@Kyle Carter a list of questions is almost useless:(

Anyone can tell you want you want to hear, especially "con-men". That's their whole game!

Reread what @Stuart Udis wrote.

We can testify to the same challenges after 25 years in our marketplace.

We also agree with @Kristian Sexton about starting with a PMC. Everyone is transaction based.  A PMC is the ONLY one that will deal daily with your property.

Here's some copy & paste advice on hwo to screen PMCs:

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In 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, they often select the first PMC they call or that calls them back!

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!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

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😊

Stuart Udis · Answer

I recently watched a video of a social media guru suggesting in 30 days he could have a team in place in any market in the country and be up and running with a successful real estate business. That content and similar content out there sets unrealistic expectations that anyone can put together their "team" and invest in distant markets. I've been investing in one market for 10+ years and my vendor list continues to evolve and never had the mindset of assembling a team I can rely upon. I believe many believe they can assemble a team of realtor, contractor, property manager and lender and become profitable. This is the furthest from the truth.

Making matters worse, 99.9% of individuals on BiggerPockets who want to buy in distant markets do so because the entry cost of doing business is lower. That is the sole motivator behind seeking out these markets and property types. In most cases due to the transaction sizes, there's very little margin for these 3rd party vendors (particularly brokers, property managers and contractors). Given margins are so thin, the misalignment of interests should give more out of state investors pause because many of these vendors will try to make up margin at the investors expense.

Min Zhang · Answer

@Kyle CarterFor PM, ask how many rental properties they currently manage, what types of properties they specialize in, and their process for screening tenants and handling maintenance issues. You’ll also want to know how they handle rent collection and late payments and if they can provide references from other investors they work with.A good investor-friendly agent should have a strong network of professionals like contractors, inspectors, and lenders to help with your investments. Ask them how well they know the neighborhoods in your target market.It all boils down to their experience working with out of state investors. I highly suggest connecting with fellow investors in the area to see who they are using for their properties.

Samuel Diouf · Answer

It will all depend on what your goals are.

Ask them questions that will help you determine whether they have the value/knowledge that you'll need to get closer to your goals. Depending on what you're looking for those questions could be different.

You'll want to work with people who are highly motivated and skilled in their field.

Kristian Sexton · Answer

@Kyle Carter My top recommendation is to begin by contacting property management companies in each target area. It's important to vet these companies thoroughly. Most property management companies are licensed realtors with extensive experience working with investors and providing valuable insights into their local market. In my experience, allowing these professionals to guide you can be highly beneficial, as they are likely to recommend properties they would be comfortable managing. Since they are responsible for maintaining the relationship with you after the transaction closes, this approach adds an extra layer of confidence and security to your investment.

If you can't find an investor agent that you like or trust that is also a Property Manager or works under a brokerage that has a Property Management Division, I would ask the agent if they recommend a Property Management Company. I would cross check their rental rates they are giving you with the Property Management Company. A lot of agents will claim to be great with investors, and not have a clue what the property would actually rent for.

Bradley Buxton · Answer

@Kyle Carter

Ask about their communication style, does it fit with yours?  Do they have the technology to do video walkthroughs? Will each team member fit with the other team members? Does the PM get along with the contractors, handyman and agent?

Anthony Angotti · Answer

Agent: Their experience with investing personally and their experience working with customers just like you. If you are house hacking ask about house hacking, OOS ask about OOS, etc. etc. Outline your goals and ask them how they can help you achieve those. Ask them what their expectations about you as a customer are.

PM: Ask them how many properties they manage in your asset class. Ask them how many customers they have and how many own a single property vs. many units. When you discuss fees don't just ask the monthly and leasing fee. Ask if they upcharge maintenance, charge to go to eviction court, post notice, etc. etc. The cheaper property managers with the monthly fee are making it up somewhere else.

How to build a out of state team

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