How to Find a Property Manager for an Out-of-State Rental

If you own a rental in another state, the property manager is the person who actually runs it. They collect the rent, deal with the tenant when the water heater fails and decide who gets the keys. Most out-of-state deals that go wrong do so because of the manager.

Pick the manager before you buy. The best time to learn that no good manager covers a neighborhood is while you can still walk away from the offer.

What they cost

Fees vary, but this is the usual structure for a single-family rental:

• Monthly fee: typically 8% to 12% of collected rent. Smaller properties and smaller companies lean toward the higher end.
• Leasing fee: often half a month's rent to a full month's rent each time a new tenant moves in.
• Renewal fee: a flat fee when a lease renews, commonly US$100 to US$300.
• Maintenance markup: some managers add 10% on repair invoices or charge a coordination fee.
• Other charges: setup fees, inspection fees and eviction handling are sometimes billed separately.

The calculator assumes 8% for management. That's the low end for a one-house owner, and it leaves out the leasing fee. If you're buying a single property, try 10% in your numbers, and add the leasing fee as a yearly cost based on how long a tenant usually stays. A one-month fee every two years adds about 4% of annual rent.

Where to look

Start with a local investor-friendly agent. Agents who sell to investors usually know which managers perform. Local landlord groups and real estate investor meetups are another source, and the online forums for the city can help. Ask for names.

Then check what you find:

1. Licenses. Most states require a property manager to hold a real estate license, and a few, like Massachusetts and Maine, don't. Check with the state's licensing board before you sign.
2. Reviews. Read them for patterns. A manager with a few complaints about slow repairs is different from one with a lot of complaints about missing deposits.
3. References. Ask for two or three current owners and call them. Ask how often they've had problems, how long the manager took to fix them, and whether they'd hire them again.

Questions to ask on the first call

• Do you cover this specific neighborhood, or only the metro area?
• How many units do you manage, and how many per person on your staff?
• How do you screen tenants? What are the income and credit requirements?
• How long does it usually take to fill a vacancy here?
• What's the repair approval limit before you call me, and who do you use for maintenance?
• Where is the security deposit held?
• What does an eviction look like in this county, from first notice to the keys, and what do you charge for it?
• How and when do I get statements and my money?

The answers about screening and eviction matter most. Walk away from a manager who won't give a straight answer on either. The eviction timeline varies a lot by state, which is why the state landlord rules are worth reading before you pick a market.

Contract terms to read carefully

Termination. Look for how you can leave. Some contracts charge a fee or tie you in for a year. A 30-day exit with no penalty is easier to live with.

Repair authority. Set a dollar limit, such as US$300 to US$500, above which the manager must ask you first. Without one, you find out about a US$4,000 invoice after the fact.

Tenant files. Your contract should say who owns the lease, the application and the tenant's records if you switch managers.

Trust accounting. Security deposits and rent should sit in a separate account, not mixed with the manager's own funds.

Owner statements. You want a monthly statement showing rent collected, fees and each repair with an invoice.

If you're a Canadian or other non-resident

Your manager will also be your point of contact with the IRS withholding rules. They may be required to withhold tax on rent paid to a foreign owner unless you've filed the right form. Ask whether they know the process before you sign. The main guide for Canadian investors explains the forms.

Watching them

Even a good manager needs a little oversight. Look at the monthly statements. Ask for photos from move-in and move-out inspections. Check once a year that the property taxes and insurance are paid. Call a tenant if something looks wrong. You're still the owner of record, so read the statements.

The out-of-state investing checklist has the full list to run before you buy, including how to get a second opinion on repair estimates.

Canadian owners can find the full sequence, from budget to closing, in how to buy a US rental from Canada.