Renting Out Of State
Hi:
I have a 2 flat building in Chicago, IL that is currently occupied, but I'm looking to move to Tampa, FL. My question is, now that I'm not going to be living in Chicago how do I manage the collection of my monthly rent?
Thank you
You should talk with an accountant (or #1 suggestion, property management company) to help you with your bookkeeping. Your tenants can send rent payments to whoever you set up.
I would agree with kimmyjack - get a property management company to manage the property for you. It will cost you between 8-10%, but they will take care of rent collection, placing new tenants, and repairs etc. It is a small price to keep your property up and running while you are gone. I have said before on this web site that many landlords have foreclosed by trying to be "long distant" landlords. Thats how I get some of my properties. A word of advice - shop around, not all property management companies are created equal - get references. Good luck.
You can simply give your tenants deposit slips to deposit the rent into your Bank account. I do it for a couple of my out of state tenants and it works out just fine. Obviously you live in Chicago and you have been managing the property thus far, do you really need a Property Management Co? You may be able to do it from Florida without too many headaches. As long as you have contractors or a handyman you can trust for repairs, I cannot see paying a Mgmt Co, to manage 2 units. If you were talking 10 or more maybe it would be necessary but for 2, I don't think it is warranted. Try it out on your own and see how it goes, then take it from there.
Good Luck! and Welcome to Florida!!
Hello Goce,
As to option #2, you can sell the property if you will not have enough PCF to make the units float on their own. You got to figure 10% of the rent going to manager, maintenace fee at $37.00 per hour. New tenant finders fee of 25%. Painting and cleaning, lawn care..... well you see the fees can add up. If you can at least break even after all of this, then I say you are doing good.
Tax wise you will be able to make a trip or two back to Chicago to check on your property, plus you will be able to write off all the fees associated with your properties. Enjoy Florida.
Hi:
I want to thank all of you for the great advices, I do have a handyman that I trust, so that is a plus, and I like the idea of giving them bank slips, but I will have to check with BankOne how safe this is, I don't want them taking money out. As for the PM, I've called some places, but they all want 5+ units, I don't know if I'm looking in the wrong place? Thanks again
Yes goce,
No money taken out is a good thing! Payment books have the loan number but not the account number, at least few I've seen.
I agree with some here to avoid the Property Management Company and keep searching for a good system, i.e contracts, internet banking, lease-option(!).
The reason is both the overhead of property mgt co.’s and their policies of hiding information from prospective buyers and the current owners. Owners don't know their nice house in nice areas has growing damage, and buyers of rentals can't get a straight story (such as me) after nearly completing two lease-options with the go-between broker’s phone calls to out-of-state owners. The retired-on-active-duty broker played along but must have been scared of concept. He figured the commission would go to Realty Office not him since he'd be retired whenever the six-year purchase option gets exercised. I had two final hour increases of $15,000 and $20,000 (same broker). Property Mgt Co's are often the Real Estate Agencies.
Their reputation in selling doesn't seem to stand up when it's time to part with their cash cow rentals. “Century 22” and “AL’S PAWN” rentals are about equal with some business tactics, but I prefer AL’S less complex way of making money. Additionally, in my case, one property I almost bought the option for was 3 years behind in taxes. I have no way to notify owner, because the tax bill is sent to, you guessed correctly, the property mgt co.
I prefer not to give property mgt co.’s business, unless a creative and good alternative is truly impossible to, not necessarily find, but...create.
CREATE! (and dbl check it with an attorney and a mentor)
Alan
Thanks Alan:
I've thought about it and I'm going to try the bank deposit slips, just talked to the bank, and they can not withdraw anything unless they have my pin or an id. And if any problems occur I will have my handyman fix it and bill me. wish me luck, if it doesn't go well I can always sell it, I have $400 monthly PCF so I want to see how much I can survive. This is also my first property so I need to learn as much as I can before I move to something bigger.
thanks for the couragement