Posted by Kelly on July 21, 2003 at 22:33:56:
I am just considering condo purchase in Seattle for a rental. Any tips of finding reliable/reasonable property management 1500 miles away?
Any Out of State Investment Experience? - Posted by Nancy PA
Posted by Nancy PA on July 10, 2003 at 11:19:52:
I currently own a 3 year old town home (worth 170,000) that have appriciated by 30K over over the past 7 months. It is situated in a great location, next to a new corperate center with a major company head quater.
I’ll be relocationg to CA next year. I don’t want to sell the house but I’m not sure how will I be able to manage a property so far away. I’m thinking of renting it out by Lease option after I move.
I am also working as an realesate agent and is thinking of buying a few more properties in PA, as cash flow here is better than CA. The fear of managing it long distance is stopping me.
Any body have advice on out of state property management?
Should I try it or forget about it?
thanks for your help!!
Nancy
My views - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 10, 2003 at 15:22:02:
Nancy–¶-----------
You don’t mention where in CA you are moving. CA is a big state and some parts of it are good for investing. The places where it is difficult to invest are the coastal areas–from about Mendocino County right on down to the Mexican border. If you are going to be inland, you probably shouldn’t buy more properties in PA, but save your money and invest locally in CA for appreciation plus some cash flow. Even if you are going to live in Coastal CA, you still might consider simply investing inland, as many here do.
I’d say don’t do a lease option. Just do a plain rental. Especially this is so if you have handypeople you know to do work for you or local friends who might be able to give you referrals when you need somebody. Since the property is as new as it is, there is probably little maintenance to do. Then the issue is getting in good renters. Many management companies will charge you a set fee to put in new renters and then leave the management to you. I think that makes a lot of sense.
If this has been your personal residence for over 24 months, you might consider selling it so that you can get out your equity, free of federal capital gains tax. Then you can invest whereever you choose. It might even be a good idea to sell the condo and invest in lower-cost properties in PA. I’m sure the place is nice, but the better rental properties are typically not ones in nice areas. If you want cash flow, you will do better in more modest neighborhoods.
Good Investing*Ron Starr
Re: Any Out of State Investment Experience? - Posted by Rich
Posted by Rich on July 10, 2003 at 13:49:39:
Nancy,
I currently have several rental properties out of state and it has worked out just fine. Your “job” is to manage the property manager rather than the property. If you would like to talk off line feel free to give me a call and we can discuss your situation.
Good luck,
Richard
(562-212-0759)
Just think “property management” - Posted by Alex F. (CA)
Posted by Alex F. (CA) on July 10, 2003 at 12:55:07:
If your property is cash flowing, even with property management expenses factored, then hold on to it, unless you need the money. My properties that are 2 hours away, handled by property managers, are easy to take care of. I don’t have to worry about anything & I check up on the property once every 2 months myself. I know of several successful investors that have out of state properties.
Where are you moving to Cali? I’m here in Southern California.
Good luck,
Alex F. (CA)
Re: Any Out of State Investment Experience? - Posted by Nancy PA
Posted by Nancy PA on July 10, 2003 at 20:17:52:
Richard,
Thanks for the advice. I’m new to the business. I tried renting out another property last year, but I got frustrated screening tenents,many have bad credits., then I ended up selling it. Am regreting it now as the property appritiated a lot since then.
I have a few questions:
What kind of lease structure is best suited for long distance management? purchase option or just a regular long term lease?
what kind of property manager is best suited? many real esate agents don’t like to deal with rentals. what’s a reasonable fee?
what’s the best way to pull equity out of rental property? refiance or home equity loan, or if there’s a better way?
thank you for your time!
Re: Just think “property management” - Posted by nancy
Posted by nancy on July 10, 2003 at 21:01:16:
Thanks Alex!
I’ll be moving to LA area. Do you know how is the rental market in LA? Home are a lot more expensive than it is in PA. I’m worried about unable to finance them. Don’t know if there are many no money down deals out there these days.
thank you for your help!
Nancy
Re: Any Out of State Investment Experience? - Posted by Rich
Posted by Rich on July 10, 2003 at 22:43:41:
Nancy,
I use a yearly lease for all rentals. When the first year comes to an end, we offer the resident the option of another yearly lease with a small increase or a month to month with a rather steep increase. We do this to encourage a commited yearly lease to cut down on turnover. It also saves them quite a bit of money over the course of the year. So, it’s a win - win for everybody.
For an out of state property, I prefer a straight rental than a lease option. I would keep the lease options for properties that I manage locally.
As far as using a real estate agent or a property manager. I strongly recommend a dedicated property manager over a real estate agent. My thought process is that a real estate agents main priority is to list and/or sell houses. If they are doing property management on the side it is simply a way to earn a little extra in between sales. I want someone that is emmersed in strictly property management. I’ve seen fees from 7%-15%. I believe you should not be paying anything over 10%. I’m currently paying 8% and that includes a quarterly walk thru.
Your goals should dicate the method in which you pull your equity out. If it is for additional property aquisition that you intend to hold, then I would refinance. If it’s a short term deal where you are going to buy and immediately sell the property or sell the contract, then I would use a home equity line. Another option would be to simply find motivated sellers and not use your money. That way you could leave your current financing in place. If you currently have a high interest rate and you are planning on holding the property, then I would go ahead and refinance anyway, thus creating addition cash flow.
By the way, I read your reply to Alex and noticed you a re moving to LA. Welcome…I live in the LA / Orange County area myself.
If you want to dicuss things further, let me know.
Best wishes,
Rich
Best of luck