Investing out of my area??? - Posted by Kory

Posted by mike on November 19, 2000 at 01:35:50:

Let me share a few experiences I have had with being an absentee landlord.

I have been in that position where I had been an absentee landlord on several occasions. The first two times, I was renting my personal residence while I took jobs elsewhere. In the second instance I was in another country. During these first two times, as a matter of necessity, I used property management companies. My experience was positive. Although they charged a commission of up to 10%, they were also able to rent the houses for more than I could, so the commission was offset by the increased rent they commanded.

In a third instance when I was an absentee landlord, I bought a house for investment purposes. Knowing that I was going to be out of town, I looked at my target market of renters. I wanted a property that would: 1. attract families with secure employment 2. have a low turnover rate 3. require relatively low maintenance 4. be easy to resell at some future date.

I purchased a 20 year old, 3 bedroom, full basement house with covered parking and a fenced yard in a popular suburb, close to schools and shopping, and 10 minute drive to downtown. The house was amongst the lowest priced (due to square footage, not condition) on the street. The reason: the house would be attractive to families, but they would need a car to get around - be able to afford a car indicates some security in a job, families with school aged children are hesitant to move in the middle of the school year, and affordability made it easy to resell. I kept the house for five years, and had five renters, all of whom stayed almost exactly a year.

My last venture into property managers was a disaster. I own a 6-plex consisting of 6 townhouse units. While these are attractive to families, the area of town has greater transiency and every couple of months or so I have to find a new renter. I initially used a property manager, but they were not as quick at renting and at one point I had 3 empty and another who had given notice. That was when I took matters into my own hands and started to look after the management myself. I haven’t missed a single day’s rent this calendar year!

Back to your situation - I would look for a house with features that appeal to families to reduce turnover, I would try to find it in a popular (and safe) neighbourhood, I would try to buy as new as I could afford to reduce maintenance, and finally I would check out property management firms and have a couple come by and look at the house. I would also become as famliar as I could in the local rental market. Carleton Sheets recommends walking around the target neighborhood and talking to residents (find someone working in the garden, washing their car, walking their dog…) - asking questions like How do you like living in the area? Do you rent or own the house? Do you know of any other renters in the area? Do you know what renters are paying for rent?

Good luck, and let me know how you make out…

Mike

Investing out of my area??? - Posted by Kory

Posted by Kory on November 18, 2000 at 09:09:59:

My wife and I are interested in purchasing income property outside of the area we currently live in. Let me fill you in. We live in Salt Lake and are looking into buying property in the Ogden area which is about 40 miles to the North of us. Two reasons for looking in that area. 1.Houses are still moderate in price, unlike Salt Lake. 2.My children are legally blind and could make good use of the school for the blind in the Ogden area.
My concern lies in the fact that it may be hard to manage property not right next door. I will probably need to do this for a couple of years until I can get myself moved closer to the Ogden area.
Does anyone have any advice for me on managing property that for now is outside of my area?
Thanks

Its YOUR personal comfort level… - Posted by David Krulac

Posted by David Krulac on November 26, 2000 at 21:52:41:

as an aside I’ve been to Ogden many times and I really liked it. 40 miles doesn’t sound that bad, but MY personal limit is 30 minutes; I don’t want any place further than 30 minutes as a rental. But I know somebody who has 20 rentals, that are 1,000 miles away.
One of the tenants takes care of minore repairs, all of the tennats have the landlords home phone number, and the landlord has a list of trusted repair people in the area that he can call if needed. Additionally he travels to his rental every month or two on a tax deductable trip.

Re: Investing out of my area??? - Posted by BillW.

Posted by BillW. on November 20, 2000 at 17:18:07:

Kory,
This is just my opinion, but you might think about the following:
If you don’t know the new area thoroughly yet, you might not be able to find a good deal the first few trys. I would look to possibly put options on properties and then assign the option to another buyer or possibly buy and then sell on terms while carrying either a second mortgage or possibly a wraparound until I made the move to the new city. That way you will be able to avoid long distance management as well as learn the area and the business better.
BillW.

Re: Investing out of my area??? - Posted by Joel

Posted by Joel on November 18, 2000 at 10:16:40:

Kory,

40 miles really isn’t that far away. You could hire a management company, but they take anywhere from 5-10% of gross rents. I am not a tax advisor, but I itemize my car expenses when I drive out to my property. 80 miles (40 miles each way) is really not that bad when you consider that someone else is paying your mortgage.

Good luck!

Joel

Re: Investing out of my area??? - Posted by Kory

Posted by Kory on November 18, 2000 at 11:34:19:

Joel,
Thanks for your comments. I plan on managing the property myself to maximize profits for now.
Could you tell me a little about your situation. Do you own one property or more? How far do you drive to your property? How often do you have to visit the property?
Sorry for all the questions, but I’m a little new at this. I would like to get off to a good start.
There is a group in Ogden called Private Lenders that sounds like an investment group on rental properties.
I would like to go up and speak with them on what they have to offer. Do you have any advice on an investment group or do you have any experience with any?

Thanks for your input…

Kory

manage distant properties - Posted by RR Smith

Posted by RR Smith on November 18, 2000 at 12:18:12:

Depending on how much you can trust other people and what your landlording skills are like you show try and hire a good manager (just like AT FIRST you might need to use a RE agent or mortgage company).

This is a interesting tread, also you might want to search on “manage.”