Why I Love Property Managers
While this is not something you hear investors say with much (or any) conviction, I stand by this statement. Flashback to 2017, when I was evaluating new markets for investment potential. Each night I would sit at the laptop, analyzing deals, different markets, unemployment rates, growth rates, crunching the numbers. Off-market vs. on. Rehabs vs. turn-keys. Buying them myself vs. with partners. In State vs out-of-State, warmer weather States vs. colder weather States.
Making the decision to buy out-of-State is a daunting task whether you are new or a seasoned investor. Based on my previous experience with out-of-state purchases, I realized my concerns were lessened once I identified and started working with a local core team. This team consisted of an agent, contractor, lender, title company (or attorney), handyman, and property manager. What I learned was that it can become quite pricey if you fly out to preview houses, only to not like any of them, or put in offers that you get outbid on. It’s also hard to be aggressive on offers when you’re doing most of it remotely, and wish to see each home in person. Assuming you also fly back for closings, it all can add up fast, and you're that much in the hole for recouping your investment.
What I found to be most efficient was finding agents who were also property managers. Having a person with dual skills is a huge benefit when looking out-of-State. Not only are they market experts, they're also tenant experts. When buying houses sight unseen as I have many times, having that local expert can truly be your ace in the hole. In many ways, these types of agents become your partner for the investment, as long as you hold it. Not only do they assist you in selecting the property, they have a great understanding of the rental market. This is a huge plus since you will be able to determine whether the property will be a good ROI before you make the purchase.
Property Managers become your eyes and ears, from screening potential tenants, handling the lease agreements/terminations, acting as the point of contact for any tenant concerns, and ensuring your rent is collected on time, to assisting in the sale when you choose to eventually list it. Though you pay a monthly fee, they more than earn that percentage, as they are invaluable to your success as an investor.
A few ideas that work for me when I work with a new property manager, that may help you:
1) Ask for references: like any agent, workplace employee, nanny, etc., ask them for a few reference you can call and do your due diligence to put your mind at ease. Often you will find out valuable pieces of information from past or current clients of theirs.
2) Request electronic payments: most managers will have a system in place to direct deposit your rent (after their fees and any repairs are deducted). More savvy managers (like mine in Alabama) use apps to allow the owner to download reports, and track any payments assessed or spent per month.
3) Set spending limits: you as the investor can decide what's in your best interest, but I typically allow them to make any repair under $250 before they have to call to get my approval. Small things like a leaky toilet or caulking in a bathroom, which can be handled by a handyman, are not worth the time you would spend trying to do this on your own.
4) Ask for receipts: just because you approve repairs, make sure you get an electronic copy of any work done. If you're a nerd like me, you love having everything backed up on hard drive and spreadsheets to track your investments with ease.
5) Reviews: like any real estate agent, property managers also love getting good reviews! Whether on Zillow, Yelp, Redfin, or any source they request of you, this is a great way to show them you appreciate their hard work and want others to know how happy you are to have them on your team.
I hope this helps to educate you on one aspect of investment properties, whether in or out-of-State. Please feel free to reach out with any questions that could help you make decisions on exciting opportunities in real estate. I am here to be a resource for you in any way!