MF is the best way to generate cash flow though. Look at Anton. You probably need 4x the money to generate the same amount of cash flow if doing non-MF.
We may have a different way of computing cash flow.
Actually you’re doing fine. You already opted for Austin which is way better than SF to generate cash flow. No need to go for broke.
1 Like
I did not notice this thread back when it was started. Just chiming in.
I sold one of my out-of-state properties last summer, was good timing … probably very close to the peak.
What was not so “peak” was the condition of my property, and subsequently, the selling price.
A few weeks ago, I purchased a local 4plex that had been under professional management for decades (I assume since 1972, when the seller had purchased it). The property management company is a well-known respected local company. The condition of the property after 46 years of professional management is the best reason to never hire a management company.
My Utah SFR had been under professional management for only 11 years. The similarities were striking.
- both had had very long-term tenants
- rents well below market (~20% in my Utah property, ~45% in my Santa Cruz purchase)
- very little work had been done
- property sold cheap due to “handy man special” status
This is not to say that the PMs were bad. They just don’t do nearly as good a job as if you self-manage.
They hired some of the most expensive local plumbers. (The ones with fancy trucks and yellow page advertising.) Who did a shitty job. I found a cleaning rag stuffed deep into the drain… had to jackhammer the slab open to get to it. No way that rag had made it there through the garbage disposal. Tenant said “yeah, this sink stopped working years ago” and “we’ve been here 12 years and never asked for any repair, [because we pay 45% below market rent]”
Unfortunately, I have made the same experience with handymen. One… very capable guy, recently got his GC license. Really strong in electrical and plumbing, but knows all aspects of construction and has built houses from ground-up. He has worked for me since 2009 (when I switched from IT to RE). Initially I would meet him at job sites and watch what he was doing. I learnt over the years from watching contractors. You can learn a lot from watching, and it’s free of charge. Eventually, I got too busy to watch him.
I found out later that on some jobs, he had … ummm… saved time. Saved me money at the time, but it had to be re-done a year later.
My conclusion is that you need to watch people closely or you pay dearly. I bought the 4plex at a 40% discount. Not saying you need to do everything yourself, but you need to watch closely.
I’m going to start selling all my remaining out-of-state properties soon.
6 Likes
I think Anton has a full time job and other things to take care of, so hiring PMs are justified in that case.
1 Like
I know. I worked 60hrs/week in hightech too and had 6 out-of-state properties. There’s no choice but to use PMs. Hopefully Anton will not make the same experience as I did.
The repair is one big reason I have been hesitant to buy low priced out-of-state properties. The cost to replace a roof differs far less than the price of properties between say Kansas and California. Relatively people are paying far more for repairs in cheap houses than expensive houses.
1 Like
Got your message. Don’t buy UTAH. Buy Austin 
Austin
Rent 5% below market and slowly raise rent annually, eventually become market.
Semi-annual inspection if no service request received, take the opportunity to inspect while servicing a service request. Fix any repairs and do any maintenance identified. If service requested is deemed the fault of tenant, tenant pays for the repairs.
船头怕鬼，船尾怕贼
@BAGB I have 3 in San Diego, 1 in Atlanta, 3 in Birmingham and 28 in Kansas City. From what I’ve seen opportunities are becoming less and less across the board, but I’m planning on buying more in KC in the next year or so because I have have a great local team there.
@ptiemann What you describe is exactly why you need to be extremely selective with who you have working for you, local or out-of-state. Because of the vetting process I use (and maybe some luck), I think I’ve built pretty successful teams, including PMs out-of-state. I try to visit my properties in-person at least once every 2 years and get an annual inspection done on all of them, so that helps with keeping them in good condition.
1 Like
You are more hands on than I am. Some property I have I haven’t visited since I purchased it 5 years ago 
1 Like
What is the PM vetting process for you? I’m hearing a lot of foks move away from out of state properties after a couple years into it. I know that PMs can make or break it.
@n4s I don’t have anything groundbreaking, really. First step, is I only find PMs through referrals from other local investors. I typically talk to at least 3-5 investors and see who they recommend and use. I’ve found that there are usually not that many reputable companies in town.
Once I have 2-3 potential choices, I run them through a phone or in-person interview (here is a post I wrote with most important ones). After talking to them for a while, you can usually formulate an opinion whether what they do will alight with how you like things ran.
I’d say thirdly, I establish processes/common operating procedures with all PMs early on. This means leasing guidelines, eviction process guidelines, make-ready SOW, etc. Then I hold them accountable to that on a regular basis (at least 1/month check in) and make adjustments as needed.
1 Like
Awesome! Thanks for the response! 
That’s an amazing story! It was smart to look outside of San Diego since prices are so high here and you won’t be able to buy as many unit for the price. Downtown San Diego Condos are very expensive as well. You’re looking at $300k just to break into the market and that will be a studio. I love hearing successful stories such as this one. Great Job!