Joe Lieber elaborates on the best way to handle being an out-of-state owner of rental properties.
Joe talks about how to interact with your property managers and the need to visit the area you’re investing in.
Mike: Welcome back to the FlipNerd.com REI classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Joe: Hi, I’m Joe Lieber and today, I’m hosting the REI classroom, coming at you from Cleveland, Ohio.
Mike: This show is sponsored by PassiveRental.com
Joe: Hi. Today, we are going to talk about being an out of state owner, how to be successful being out of state, or even out of country. I’ll give you a couple key points to think about as we have our talk today. So what does it take to be successful? Well, first of all, you have to relax. You have to trust the property manager that you’re going to hire.
If you’re too aggressive with them or make them mad, you’re not going to get the best service. If you’re on top of them all of them all the time, worried about how much you paid to put a faucet in, you’re probably going to get another faucet charge next month, if you know what I mean. Just relax, be charismatic. Work with your property manager; don’t always try to beat them down.
And let’s talk about hiring that particular manager. So you’ve got to narrow it down. You’ve got to ask these managers “How many units do you have in management right now? How many are you trying to get to?” That’s important because if you’ve got a guy out there trying to take out a loan and get 1,000 units in management, I don’t know if that’s the best either.
I like the guys that are between 500-700 units, they run a good, solid business, 15-20 employees, and everything makes sense. You get the VIP treatment. That’s the type of management style that I look for. And most importantly, here in Ohio, you have to be licensed. You have to be licensed to be a property management company and have a real estate license. And that’s something important to check out too.
When you’re buying houses here, listen to podcasts. See what’s going on out there. There are a lot of referrals, there are people that buy in those markets. Contact them, see how they’re property management services are. It’s not always going to be perfect. Sometimes, it’s ever changing. You may have someone who’s on their game for a couple of years and then things change in that property manager’s personal life, or he has a different direction he wants to go in his business, and you have to stay on top of it.
So also, being an out of state owner, come to your market. You invest there; it’s your hard earned dollars there. Come check it out, get a lay of the land. Meet the property manager face to face. Ask him if he can help you with your expectations if you guys flow well. I take a lot of my clients when they come into town and we meet the manager at lunch. For a half an hour lunch to get to know the person that is going to be handling our asset is probably not a bad idea. Also, the style of investing that you do as an out of state real estate investor, what’s the best possible way to make my property perform? What makes [Inaudible 00:03:00] when I do it for my houses?
Everyone one of my single-family homes is on a rent to own basis. That helps a few things here. So one, being rent to own, now instead of getting a security deposit from my tenant I now get a non-refundable down payment. Now the tenant is in a contract to possibly purchase the home in a period of years. I’m thinking a three- to five-year lease, they can seek bank financing. What happens is now the tenant is invested in the home. They’re responsible for the repairs to the property. They’re responsible for maintenance.
So it helps cut out management in its entirety because if they are invested in the property, there is much more likelihood chance that they are going to pay you next month. And it’s [Inaudible 00:03:46] property manager having to send his technician out and you get a big bill for a leaky faucet because the tenant would be responsible.
So keep that in mind with your investment style. Don’t just think rental property. A lot of times, unfortunately, even though the property is a rent to own property, the tenant can never come through and exercise their option to buy. So just a great tip to think about when you’re making your choices. We’ll catch you on the next show.
Mike: PassiveRental.com is your source for turnkey done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash flowing, professionally manage rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting PassiveRental.com
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