What to do with Rentals when Moving out of state ? - How do you do it ?

Rehabbing, Fix and Flip, Rental Properties
1

For family reasons I must move south…

I know that having a Property Manager is the first line of defense.
I have 3 nice SFH’s, rented and will probably not want to return to the area.
S*it happens and I can always fly up and take care of it my or hire a handy man before I leave to fix things.

The cost of managing 3 properties monthly = paying for a $500 round trip ticket every month no matter so that does not make $$ sense to me at the moment.

Selling with Tenants residing in properties years from now when the market recoups looks problematic from here as I have never done it and have been managing my own properties thus far. That is what I am most concerned about, selling not being here with tenants installed. When I have a property coming vacant I see myself flying up to camp inside until I have it rented…

Thanks for any input I have not thought of yet…

2

Do you have any family or non-military friends where you are? If so, see if you can work out something with them. A handyman or at least knowing who you can call for plumbing, electrical, roofing, HVAC, etc is a must when doing things from a distance. You will not be able to fly up there at a moment’s notice to fix things in case of an emergency. You’re going to have to bring someone else into the situation if you’re keeping the places. If you have people you can trust to show the places, make repairs, etc - you can work this out.
Our out of state property is located 20 miles from where my parents live. They show the place and go over to let the repair guys in when necessary.

3

I would sell the houses take the money I get out of them and buy houses where I move to.

4

Hi,

I have owned portfolio properties in multiple states at the same time, and although they are challenging at times they are not unmanageable and it can be done successfully! First I don't leave my real estate responsibilities with friends or family, I want to still have friends this time next year and I would like to remain on speaking terms with my family.

Look into a professional management company, generally they will charge 10% for the management of your properties, screening and interviewing prospective tenants, performing background checks and coordinating with a handy man / service tech to make minor repairs and fix leaks or plugged toilets!

Today, technology exists where wireless alarm systems can be installed during breaks in tenants that operate on AC and notify police through the wireless cell phone system, in the event of a power outage a back up battery will maintain the system for a few days!

                     GR
5

I know people that are married to wives that live in other states successfully also. Although it can be done it is not what you want to do unless you have no other choice. (like you live in California or something) Just like when you move you take your wife with you I believe that you should take you real estate with you also. I recommend that you sell that house and put the money in real estate where you live.

6

Thanks for everyone’s input as I am considering all options… Selling is the hardest thing to think about since it is a buyers market…

7

Why are you worried about selling the houses? If you bought them right then you should have no trouble selling them to a local investor who’s looking for cash flow.

8

Hi,

Why as an investor would I worry about selling houses? If you bought them right then you should have no trouble selling them to a local investor who’s looking for cash flow!

Hmmm! Hmmm! Hmmm!

Right now as investors in most of the country were required to put down 20 to 25 percent in cash, owner carry backs are no longer allowed, and we are required to have 6 months to 1 year of reserves and must meet the credit, income and tax return guidelines to qualify!

Now to sell we take a property and subtract 8.5% generally for realtor fee’s and closing cost’s, sure we might get out with something net, but getting back into 3 SFR with the net proceeds of a sale may be extremely difficult!

And we are currently in a soft market in a lot of the country, in some cities down as much as 60% over 5 years ago, so if I own and control a property and mortgage now, I may not be quick to think getting a little cash out is good, and for people with middle class incomes those 3 SFR could be a yearly tax credit in the $6k to $8k range reducing taxable income and providing a shelter!

So why would we want to sell now???

                   GR
9

So in other words you don’t think the OP should sell his property right now because the market is soft. But apparently it didn’t occur to you that the new market he’ll be buying property in will likely also be soft and selling at depressed prices. So it’s pretty much a wash. Way to use common sense and deductive reasoning.

10

Hi,

"So in other words you don't think the OP should sell his property right now because the market is soft.  But apparently it didn't occur to you that the new market he'll be buying property in will likely also be soft and selling at depressed prices.  So it's pretty much a wash.  Way to use common sense and deductive reasoning."

HomeSlice made this statement above! Yes we are going from soft market to another soft market.

First House

$100,000 FMV
$ 6,000 Realtor Fees to Sell
$ 2,500 Estimated Closing Cost’s
$ 20,000 Required for Down Payment to Purchase New Like Value Rental Property
$ 2,000 Estimated Purchase Closing Cost’s
$ 400 Appraisal for New Purchase Lender
$ 250 Home Inspection Service
$ 8,400 Reserves Required for 12 Months to Purchase New Rental.

$ 60,450 You must owe less than 60% LTV in order to replace One Home for One of Like Kind and Value!
(When this is purchased the borrower will need sufficient income to cover his Family Home and the Purchase of this New Rental Property within the debt to
income ratio required to approve the loan, then to make things worse unless you have already sold all your current rentals you will only get 75% credit for
rental income on any other property you own and rent!)

Second House

$100,000 FMV
$ 6,000 Realtor Fees to Sell
$ 2,500 Estimated Closing Cost’s
$ 20,000 Required for Down Payment to Purchase New Like Value Rental Property
$ 2,000 Estimated Purchase Closing Cost’s
$ 400 Appraisal for New Purchase Lender
$ 250 Home Inspection Service
$ 8,400 Reserves Required for 12 months to purchase new rental. (Now I have not bought any new SFR portfolio properties in the last 5 years but I suspect now if
you purchased another property recently there going to want to see reserves for both properties for the balance of the first purchases year and all of the
second properties year.)

$ 60,450 You must owe less than 60% LTV in order to replace One Home for One of Like Kind and Value!
(When this is purchased the borrower will need sufficient income to cover his Family Home and the Purchase of this New Rental Property within the debt to
income ratio required to approve the loan, then to make things worse unless you have already sold all your current rentals you will only get 75% credit for
rental income on any other property you own and rent!)

Third House

$100,000 FMV
$ 6,000 Realtor Fees to Sell
$ 2,500 Estimated Closing Cost’s
$ 20,000 Required for Down Payment to Purchase New Like Value Rental Property
$ 2,000 Estimated Purchase Closing Cost’s
$ 400 Appraisal for New Purchase Lender
$ 250 Home Inspection Service
$ 8,400 Reserves Required for 12 months to purchase new rental. (Now I have not bought any new SFR portfolio properties in the last 5 years but I suspect now if
you purchased another property recently there going to want to see reserves for all properties for the balance of the first purchases year and all of the
third properties year.)

$ 60,450 You must owe less than 60% LTV in order to replace One Home for One of Like Kind and Value!
(When this is purchased the borrower will need sufficient income to cover his Family Home and the Purchase of this New Rental Property within the debt to
income ratio required to approve the loan, then to make things worse unless you have already sold all your current rentals you will only get 75% credit for
rental income on any other property you own and rent!)

Now if you and your wife own a like kind and value home of $100,000 and also pay a equivelent PITI payment according to my calculations you will need to make roughly $90k a year to qualify for the new mortgages without any personal debt. You will need to take a “Like Job” in the new city to be seen by the lender as a career change, you must have 2 years tax returns with no glitches that may cause a denial, you must have over a 720 FICO score to get the rental property mortgages. Then I pretty much know the condition of my properties, however buying a new property may require additional expense or unknown cost’s!

Yes, if you owe less than 60% LTV, have sufficient income, tax returns and good credit you can replace them, but you throw away 10% to do so, that’s the real estate cost’s and fee’s.

But, yes it is possible to do, but I don’t think it’s worth throwing away 10% to do so!!!

                  GR
11

My first experience with managing rental property was after moving out of a property in college. The landlord liked me and asked if I wanted to help with maintenance and management.

He was from Texas and the property was in kansas. He had an account with commerce bank and the rent was paid into that account. He called the tenants and kept a relaionship that way. He paid 1/2 of the first months rent to a local management company to show and lease the place, and then he took over from there. From there the management company did maintenance for an hourly rate. I took over the leasing and management for him and did whatever he wanted for an hourly rate. I didn’t usually talk to tenants about money.

You should be able to figure out something like that in your area. It worked fairly well for him. He flew up every once in a while to meet the tenants (once a year?) and didn’t do much else himself.