@Will Stahl,
Funny, I don't remember where, but I've heard of a brothel law like that before too!
I don't mean to dissuade you from investing in the Binghamton area. As I said, it's a great place to own rental property. I own what I consider to be an average priced property. It is in very good condition, and I have high standards when it comes to maintaining it. I have had great tenants for the last several years, and they have helped me take good care of the property and made managing it from a distance easier. The reasons I am selling come down to these:
1) Management
2) Money
3) Desire
Management:
As we seem to agree, finding good management in the area is difficult. Because I have high standards, I haven't trusted the few PMs that I've found. I have strongly considered starting my own management company in the area. Ironically, I feel more strongly about it now that I'm gone and searching for management, but since I've now moved that makes the idea of starting a company in the area much harder to accomplish. Managing from a distance without a property management company (and even without any paid help at all!) is not impossible. I have done it for almost 2 years. I think it helps to have good tenants who take care of the property AND are willing to report to you when something needs attention. With that alone, you can do it. However, I also believe it helps to know people in the area that you can trust - a handyman or contractor(s) would be great, but not necessarily required. The problems I see are 1) reliable information about the condition of your property, and 2) speedy attention to whatever needs to be addressed. Tenants, even when they mean well, are not always reliable sources of information, and situations can become emotional when something is affecting their peace and enjoyment at home. You will also end up negotiating/working with them on how to solve a problem that they often feel is only your responsibility. The most important thing, though, is to have someone who can get eyes on the property/problem on short notice. Even if they're not a handy person, that's ok, as long as you can communicate well with them. Personally, I have relied on tenants with varying degrees of success. At other times I have had friends help with this. Some were handy; some were not. Sometimes it's a favor; sometimes I've paid them.
Access to the property is always an issue though, unless of course it's a tenant. But even then, it can be tricky when you're dealing with more than one unit. Assuming you're not working with a professional PM, I strongly recommend giving the person you choose a copy of all of your keys. I've only recently had a friend hold keys, and we kind of fell into that arrangement, but it's helped tremendously! I have always had NYSEG (utility company) hold a key to access the meters in the basement, even when I lived in there. And for a short time, I had a large plumbing company hold a key as well (not all keys, just the most essential one). It's not cheap to use a professional person or company as your primary source of information, especially, for instance, a large plumbing company - I can tell you from experience, and I don't recommend it! haha But it is very handy to let them hold a key when it comes to scheduling a time for them to get in and do work. Coordinating schedules when your tenants are the only key-holders is a huge pain!
Anyway, to sum up, even though I started to iron out the details, my decision came down to management quality and management cost.
Money (or rather time + money):
Managing from a distance, whether you use an established company or not, costs more than self-managing locally. It's a cost that most people factor in up front (or should!), but I never had to before. Although I found a way to manage the property and still make a profit, the margin was thinner. Keep in mind, I own only one property! I decided that my choices were either buy more properties to increase my over all profit and spread out my overhead and management costs, or sell the one I have.
On top of that, I have owned the house for 15 years. I have a good amount of equity in it. I bought the house 100% financed, so in a sense, I have an infinite return. But once I factor in the amount of equity I've built up both through loan payments and appreciation (yes, appreciation does exist in that area, just slowly in my opinion, and some of it was forced), my return is decent, but I can do better elsewhere. And the longer I wait, the lower my return.
Desire:
In the end, I chose to do something different. My life is different now than it used to be. I work full time and have a family. Since I haven't trusted my property to an established company that could handle everything, it has required more time and effort on my part. I want to spend less time on my investments right now, not more. Or at least less time per dollar.
I love buy and hold rentals. And to reiterate (again!), Binghamton is a good place for that. Right now though, I have other ideas of where my real estate career will take me (lending, etc - more passive roles like that or managing short term projects like flipping). I am almost certain that I will get back into rentals in the future, and over the years I have worked hard to create systems to simplify, strengthen, and legitimize my future rental business. But that's just not where I'm going right now. Also, while there is a good chance that I will eventually buy more rentals in the Binghamton area, with the growth trajectory I have mapped out and my ideas of how I want to structure, it will involve buying a lot more units and utilizing paid management. If, at that time, I still can't find any management in the area that is up to my standard, then I just might start a company. :-)
