Step-by-Step guide to buying an Investment Home in Austin Texas
This blog is the fourth part of a multi-part blog about buying an investment home in Austin. It is broken down into several different articles for ease of reading. This series is going to concentrate on investing in one-four family houses with an investment strategy of buy, hold, and rent. This is not a blog about flipping homes.
Which types of real estate make the best investments and why?
What is a property manager? Do I need one?
Which areas of Austin offer the best investments?
How to properly analyze if an investment home is a good investment
What is a property manager and will I need one?
A property manager is a 3rd party company that typically handles the day-to-day management of your investment. They usually handle leasing, tenant screening, coordinating major repairs, move-ins, make readies, and accounting on your property. The primary job of a property manager is to maximize your income while minimizing your problems.
In Austin a property management company will typically charge 50-80% of one month’s rent for leasing. They also charge a recurring fee that ranges from a fixed fee of $48 per month to 8% of the gross rent per month for their services. If you would like, your REALTOR© can work with the management company to handle the marketing of the home for you. Many times, the REALTOR© that helped you buy the property may give you a break on the first time leasing services.
Do you need to hire one? That depends. Are you local to the area and have a network of contractors that are reliable? Are you willing to respond to emergency requests in the middle of the night? Do you like working with people? For an investor where all of those conditions are true, it is probably not necessary to hire one. However, should any of those conditions be false, particularly the one about not being local, then I would highly recommend hiring a management company.
How do you select a good manager?
This is a very important question. Unfortunately, the property management industry does tend to attract some of the highest number of complaints compared to other real estate professionals. If you decide to hire a manager, and I cannot emphasize this enough, do your homework!
Check with Texas Real Estate Commission’s complaint web site and verify that the management company has a clean record. This is important because many of the complaints filed by consumers are against property managers. A good property manager will never co-mingle funds between a client's rental account and their brokerage accounts.
They should also maintain a good relationship with their tenants, owners and referring REALTORS©. Additionally, while researching a management firm look for a firm that has earned the Certified Residential Management Company designation, or at the very minimum has staff that have earned the Master Property Manager designation. These designations recognize people and firms that have extensive experience and integrity in residential property management.
Once the search has been narrowed down to your top three firms, compare their management fees, leasing fees, escrow fees, eviction policy, and availability of on-line accounting. Next, ask for references from each of the management firm from current owners, referring REALTORS©, and if possible past tenants. Online reviews from either Yelp or Google can be a good source of learning more about experiences that people have had with a particular company. However, relying solely on on-line reviews to make a decision can be misleading. On-line reviews are posted anonymously which can make it difficult to verify that it is a legitimate review. People tend to complain when there is a problem and not when things are going well. Look for a company that has a good mix of good, neutral, and bad reviews, as that will likely be more accurate than a company that has all one-sided reviews.
Finally, after doing your due dilligence, ask your REALTOR© to show you some rental properties that are under management from them. This will give you an indication about how well they take care of their properties.
About Jordan Gouger
Jordan Gouger is a buyer’s agent with Keller Williams Realty’s South West Austin Market Center. He specializes in working with first time home buyers and buyers of residential investment properties. Among his areas of expertise are South Austin, Gracywoods, Quail Creek, North Central Austin, and Scofield.
Jordan places customer service above anything else and always goes the extra mile to help his clients achieve their real estate goals. He has experience working with out of town buyers and is able to help coordinate everything locally to ease your peace of mind. For all of your buying needs, please contact him at 512-693-9297 or email@example.com