Many Investors feel they can expand their portfolio by acquiring assets out of the area they are currently operating. There are numerous reasons for this (higher rates of return in secondary markets, better tax benefits, etc…). Now, this may be true but it can also be a good way to lose your investment. I have experienced both wins and losses from investing in other areas and I had some tough lessons to learn that I will pass on to you. I will say that many of the assets we have acquired out of the area were also owned by other absentee owners and these assets were being sold because they were not profitable for the past ownership, the management companies had run these assets into the ground and were taking revenue that was not rightfully theirs.
1) Find a reputable property management company and due your due diligence, lots of references and check their online reviews.
2) Be sure you have a good accountant that can watch over the books every month, know where every penny is going and that all reconciliations have been done.
3) Make sure you are aware of all of the local and state laws that may be different in the new area.
4) Be aware of insider tips for reducing expenses (i.e.: hiring local specialist that can appeal taxes, utility costs, etc…)
5) Before buying out of your area be sure to budget regular visits to your investments (I am currently on a plane from Los Angeles to Dallas to check on one of ours).
6) I recommend that some of your visits are surprise visits, not every one of them, as you don’t want your property management team to think that you don’t trust them, but do make a few.
7) When you show up at your property have a specific plan and what you want to see while you are there, tour the property and makes notes so on your next inspection you can refer to them.
8) Talk to your tenants, ask them how they feel the management team is doing.
9) Take the time to get to know your management team, take them to lunch and know as much about them as you can.
10) Go to the surrounding properties and introduce yourself as the owner and make sure they have your contact information in case of any emergencies, or maybe they may want to sell at a later date and you’ll have an opportunity to expand your portfolio.
11) Conduct team meeting and discuss how the property is functioning with the team, what can they be doing better or should there be changes.
12) Daily reports are a must; short form is OK but just be sure it includes the information you need.
A good property management company can make your investment work very well for you, just be sure you remember to treat your property like it’s your business…because it is your business!