There’s a lot of money to be made in rental properties. If you’re savvy and know how to select good properties, you get the dual benefit of steady, monthly cash flow and an appreciating asset. But is remote landlording ever a good idea? And if you do venture into the world of long distance landlording, how can you make sure you have success?
Why Are You a Remote Landlord?
Let’s start by being clear about one thing: remote landlording is not ideal. It comes with a lot of complications and isn’t something you should do without careful consideration. Having said that, there are three scenarios in which remote landlording becomes an option:
- Job relocation. This is perhaps the most common reason people become remote landlords. They end up getting relocated to another city and decide to rent out their current home, as opposed to going through the trouble of putting it on the market.
- Inherited property. When a parent or relative passes, it’s possible that their home enters into your possession as part of their will. If you don’t live in the city, and don’t have any intentions of moving, you suddenly become a long distance landlord by default.
- Vacation rental. Finally, there’s the vacation rental situation. While it’s nice to have a place that you can visit every once in a while, vacation rentals take time and effort to manage.
There are probably a couple of exceptions, but generally speaking, you shouldn’t enter into a remote landlording situation outside of these three scenarios.
8 Tips for Long-Distance Landlording
Should you find yourself in a situation where you’re managing rental properties remotely, you have to be very strategic with your approach. The slightest misstep can compromise your entire investment and leave you in a vulnerable position.
The following tips will help:
- Set the Right Price
When managing a property in your city, you have the ability to experiment with different things to see what works – including the price. When renting remotely, you have no such luxury. In almost every situation, it’s a good idea to rent below the going rate.
By setting a lower price than the competition, you instantly gain access to a larger pool of candidates (which increases your chances of finding a good tenant and reduces the time the property is vacant). You also have a greater chance of ending up with a long-term tenant. When renters know they’re getting a good deal, they’re less likely to move out of boredom.
- Carefully Vet Prospective Tenants
Problem tenants are never good, but they’re a terror when you’re forced to manage a property remotely. One of the best things you can do is implement a strict vetting process for prospective tenants.
When vetting prospective tenants, one of the most important actions you can take is to talk with past and current landlords. This will give you some insight into their behaviors, honesty, and reliability. If you run into someone who has a history of making late payments, cross them off the list and move on. You don’t have time to be chasing down a rent payment when you’re hours away.
- Utilize Technology
As a remote landlord, technology is your friend. It gives you the ability to communicate remotely, as well as streamline time-consuming, mundane processes like rent collection, accounting, and advertising listings. Find tools that you’re comfortable with and use them to make your job easier.
- Get a Home Warranty Plan
One of the smartest things you’ll ever do when managing a property remotely is to sign up for a home warranty plan.
“With a home warranty plan, many home repairs are covered and you don’t have to search for reliable, local trades people,” says George Sudol, a real estate broker in the Bay Area. “However, you still have to pay the annual cost of the home warranty plan (typically $350-$500) + a $55-$60 deductible for each repair that needs to be done.”
- Communicate Frequently and Effectively
Communication is paramount in any relationship, but it really matters when you’re managing tenants from afar. The more you communicate, the better off you’ll be. Not only does it remind tenants that you’re in the picture, but it also gives you a chance to prevent problems (rather than only reacting to them).
While email and texting are great in many situations, make sure you also connect via phone every once in a while. It’s a lot harder to misinterpret something when you actually hear the other person’s voice on the other end of the phone.
- Have a Zero-Tolerance Policy
When you manage a property down the street, it’s easy to be a little lax with certain policies and give tenants two or three chances to get something right. When managing a property remotely, you have no such luxury. In fact, you need to have a zero-tolerance policy for breaking rules. This shows tenants that you’re serious about the terms of the lease agreement.
- Check-In at Least Once a Year
No matter how good you feel about your property, who your tenant is, or how many other people you have keeping an eye on the rental, make sure you check-in on your property at least once a year. Nothing can replace seeing the property with your own eyes.
- Hire a Local Property Manager
Want to know the real secret to successfully managing properties remotely? It’s to hire a local property manager who can handle all of the details for you. From finding tenants and collecting rent to scheduling repairs and evicting problem tenants, a skilled property management service can do it all.
Let Green Residential Help
At Green Residential, we work closely with our clients to provide white-glove property management services that make tenants happy, keep rentals profitable, and put landlords at ease.
Whether you’re local to the Houston area, or find yourself in a position where you’re managing a property remotely, we would love to help you with your landlording responsibilities.
Contact us today for a free property evaluation!