Learning to manage rental properties remotely is a core principle of growing your passive income portfolio. The Wall Street Journal recently coined the term “Laptop Landlords” for small investors who own and manage rental properties remotely.
Our rental property portfolio entirely consists of out-of-state properties. Property management is often considered the most critical aspect of real estate investing, frequently being able to turn poor-performing properties into successful ones.
Our own experience matches this. In the past, when we changed our strategy for property management, the performance of those properties skyrocketed.
Couple out-of-state property management with remote management of said properties, creating a unique demand for learning how to manage properties remotely.
- Remote property management is crucial for growing passive income portfolios and enables investors to live and invest in different locations.
- Property management involves overseeing and maintaining real estate, including managerial, financial, and legal duties.
- Property managers are a local presence for out-of-state owners, handling tasks such as rent collection, maintenance requests, and tenant relations.
- Hiring a property manager can cost 8-12% of the total monthly rent and additional fees for management, maintenance, leasing, and lease renewals.
- To manage rental properties remotely, establish an online presence for advertising, screen tenants electronically, and use e-signature lease agreements.
- Collect rent online and maintain ongoing communication with tenants for effective remote management.
- Build a network of local contractors for maintenance and repairs, and have a plan for evictions and move-out inspections.
Why Do Landlords Manage Rental Properties Remotely?
Your freedom will be limited to more than the extra time you’ll have, so you are not limited to one location for your income. Our philosophy in our quest for financial freedom is to live where we want but, at the same time, invest where it makes sense.
You can rent a property anywhere and have a passive income if you manage it effectively.
This is an example of my situation: I live in Colorado, while my rentals are scattered throughout the remainder of the country.
There are two options to manage your property: use a local property manager or attempt to manage it yourself.
A local property manager is the best solution, and it’s a viable option if more expensive.
This article will tell you how to manage your rental property remotely from anywhere.
What is Property Management?
Property management refers to the various activities and functions of overseeing and maintaining real estate. These tasks can range from simple tasks, such as ensuring the property is well-maintained and clean, to more complex tasks, such as ensuring the property complies with local regulations. Property management involves many activities and responsibilities related to owning and operating real property, including managerial, financial, and legal duties. Third-party contractors who manage the property are responsible for the day-to-day control of the residential, commercial, or industrial real estate.
Property management is the literal “face” of the property in the eyes of the renter. You represent the owner in all aspects of management and local community interfacing.
What Can You Expect Property Managers to Do?
A property manager is a person or company that out-of-town investor or owners hire to oversee and manage the day-to-day operations of their real estate investment. There are several reasons investors might choose to hire a property manager for their rental properties, including wanting someone with local expertise to take care of the property or taking a more hands-off approach themselves.
What exactly does a property management firm or manager do to look after the buildings they are in charge of? Some typical duties a property manager may perform for a foreign investor include: – Conducting market research to help the investor determine what types of properties are in demand and would be a wise investment. – Acting as a liaison between the investor and tenants, handling tasks such as collecting rent, responding to maintenance requests, and addressing any concerns or issues the tenant may have. – Maintaining the property, performing repairs or renovations as necessary, and ensuring that the property meets all required safety and occupancy codes. – Keeping track of the property’s financials, such as expenses and income, and providing the investor with periodic reports.
- Adheres to all relevant regulations and laws pertaining to landlord-tenant relations.
Although it may be difficult for a foreign investor to keep up with all landlord-tenant laws and regulations, it is still possible, especially if the investor is familiar with the country’s laws. A property manager can help you avoid legal difficulties by handling these rules on your behalf. Property managers who work in a particular region are typically more familiar with the local laws and regulations.
There may be restrictions on the security deposit amount that a landlord can charge in various states. If a property owner unfamiliar with the area accidentally charges a tenant a deposit higher than what is allowed, a property manager familiar with the site may be better able to ensure that tenants are charged the correct amount.
- Functions as an office for out-of-state owners.
A property manager is a local presence for foreign owners and an on-site expert. This individual is responsible for the overall management of a property, ensuring it is up to code and running smoothly. If someone lives out of state, they would not necessarily be prepared to manage a property in a place like California, New York, or the Midwest, where they are not intimately familiar with the area. Other operational problems that may com up, like maintenance and other emergency issues, may be challenging for a property manager to handle remotely.
- Receives and acts on service requests.
A property manager or property management firm can also handle requests for maintenance and other on-site maintenance. It is essential to have a manager on-site who can answer tenant problems immediately. If a landlord takes less time to fix maintenance issues, it can upset tenants.
Having someone on-site who can deal with these issues as they arise is essential. Tenants may request maintenance for several reasons, including malfunctioning appliances or pests in their homes. If landlords don’t help tenants with problems in their rental properties, the tenants may leave when their leases expire. A solid presence in the local area is very important in dealing with tenant concerns.
Ensuring reasonable service requests are quickly and efficiently handled is critical. After all, owning and managing a property is an essential service to the tenant.
Our standard ensures that properties are clean, safe, and efficiently managed.
- Displays vacant units and leases them.
If you live out of state and own a rental property, working with a professional property manager can help you avoid the financial loss of having a vacant property for a long time. If you’re looking to rent out your property, you’re better off hiring a property manager to find new tenants and renew leases.
Additionally, tenants may be hesitant or able to move into a house after viewing it. As someone who lives out of state, you may be unable to show off your properties. If you’re an owner, having a property manager lets you have someone on the premises who can take care of any issues and show prospective renters the full potential of the spaces.
- Gathers and deposits rent.
Property managers also collect and deposit rent payments as part of their responsibilities for the properties they oversee. Property managers and firms can help the money reach the property owner quickly by collecting rent via internet sites or apps.
Property managers are responsible for the management and maintenance of the property, which may include duties such as collections, evictions, and past-due payments.
The Costs of Hiring a Property Manager
The cost of working with a property manager or management firm depends on the organization and region. Property managers typically charge 8-12% of the total monthly rent for their services.
Along with a percentage-based management charge, working with a property manager may additionally incur the following expenses:
- Management Fee
Some property managers charge a flat price rather than a percentage for their services. The cost of living varies depending on the business or person and the location, just as the percentage does.
- Maintenance Fee
Whether you hire someone to help manage the property, you will still have maintenance costs. Some property managers charge per incident, while others charge a monthly fee to cover any repairs they might have to do for tenants. The manager or management firm might also charge you for their help handling the problem.
Typically the property manager will do what is known as “mark-up” the maintenance fee for any given incident. This fee is to coordinate with the local handyperson and ensure the tenant knows when the crew will be on-site.
- Leasing Fee
A leasing fee is a charge that your property manager may charge in order to cover the cost of advertising your property to potential tenants. This encompasses the relocation fees and expenses linked to handling applications and renters. This may be a flat fee or a percentage of the monthly rent, similar to other fees.
Typically a lease-up fee will be 50%-100% of one month’s rent.
- Lease Renewal Fee
Some property managers charge a fee to tenants who wish to renew their leases. The cost may be fixed or part of the monthly rent, like the other fees. The fee includes the price of the time it takes to get the tenant’s signature and renew the lease. However, a lot of property managers ignore this charge.
What if you still want to manage the property remotely, from out of state or another country?
Here’s Exactly How to Manage Your Own Rental Property Remotely
But if you want to be more strategic and maximize the rent you get, you should pay attention to a few people. It is easy to post photos and rental listings online on websites such as Craigslist, Postlets, and HotPads. However, if you want to be more strategic and get the most rent possible, you should take note of a few things.
The harder part? Physically showing the property to prospects.
First, put together an FAQ document about the property. You should cover every detail when renting an apartment, including parking, utility costs, pet policies, and whether anything is included in the rent.
For example, if the open house will be held on January 14th from 2 pm to 4 pm. The homeowners invite you to an open house on January 14th from 2 pm to 4 pm.
To lease a property, it is necessary to have a representative present. One option is to seek assistance from a friend, family member, or property manager, who may charge a one-time fee equivalent to a month’s rent.
Doing this is now easier than ever and can be done from anywhere.
Start by collecting electronic rental applications that you can have tenants e-sign and email back to you.
To ensure a thorough screening process, you should obtain credit, criminal, and eviction reports from applicants. Various online websites offer the option to charge fees directly to applicants.
This is beneficial as it eliminates the need to collect application fees.
Next, call your shortlisted applicants’ employers. Be sure to check that the prospective tenant’s income and employment are in line with what they stated on their rental application. Ask their supervisor about how responsible and reliable the person is before hiring them.
Finally, call their current and prior landlords to learn what kind of tenants they are.
Leasing & Move-In
As a security measure, many landlords will ask for the first and last month’s rent upfront and a damage deposit. This can often be paid electronically. Several ways to pay rent online include PayPal, Venmo, and other online rent collection services.
State-specific lease agreement packages with e-signatures are available.
The only part of this process you must be physically present for is the move-in condition inspection. Ensure you get this document as part of your lease agreement, and have your rental agent take pictures showing the date and time!
Collecting Rents Payments
As a rental property owner, collecting rent payments is an essential aspect of managing your investment. The process involves setting up a consistent rent collection system, providing tenants with clear payment instructions, and monitoring the timely receipt of rent.
Establishing convenient payment methods, such as online transactions or direct deposit, can simplify the process and encourage punctuality. It’s crucial to maintain accurate records of payments and issue receipts as proof of transactions. In case of late payments, enforcing late fees and communicating with tenants can help maintain a steady cash flow.
Some Options for Collecting Rent Include:
- Landlord Studio
- ACH Electronic Transfer
- Rentec Direct
Remember, understanding your local landlord-tenant laws and adhering to them will ensure a smoother rent collection experience and prevent potential legal issues. By mastering the rent collection process, you can alleviate the frustrations of traditional financial advice and investing, empowering you to better manage your rental property.
If you’re a landlord who doesn’t live near your rental property, it’s important to stay involved in the day-to-day operations. Although you’re not physically present, you can still be an active and effective landlord.
It is recommended to reach out to tenants who only occasionally communicate every three months as a routine check-in to ensure proper management of the rental property.
-In order to ensure your safety while living in an apartment, you should regularly check for leaks or other maintenance problems that could potentially cause damage. Additionally, it is also important to stay up-to-date with news happening in the neighborhood in case of emergency. When you inquire about your client’s family and occupation, you are creating a rapport that implies you care about them as a person–not just a transaction. This humanizes you and makes them more likely to trust you.
Maintenance & Repairs
A small team of local contractors is necessary to manage rentals effectively, regardless of your location.
You’ll save money by hiring low-cost handypersons to take care of small repairs and routine maintenance. While fixing up a house, you will need to hire different types of specialist contractors, such as those who specialize in heating, ventilation, and air conditioning (HVAC), roofing, plumbing, and electrical work.
You’ll even need a local working crew service for clean-outs.
Developing positive relationships with contractors can enhance your effectiveness as a remote landlord. Engaging contractors can facilitate property management.
Get at least a few quotes for the job, as some contractors might be inclined to give a higher quote if they know you’re not from the area and can’t inspect the property yourself.
Evictions are an unfortunate but sometimes necessary part of property management. When you’re managing property rentals long-distance, this makes things even that much more difficult.
If you want to evict a tenant, you must hire a local service. One possible option for evicting tenants is Nationwide Eviction. This company can serve tenants with eviction warning notices, appear on your behalf in court, and handle other necessary eviction-related tasks.
Many companies in different locations offer these services. It is recommended to have a prearranged plan.
As a long-distance landlord, you need to take action straight away if your tenants need to arrive on time in paying their rent. This means serving them with an eviction notice and then filing for eviction if they don’t pay up. This sends a strong message to your tenants that you will not tolerate any violations of your lease agreement.
You will need a person or team of people to conduct move-out inspections.
This person is your go-to person for boots on the ground. Use the same person who showed you the property and did the move-in inspection when you first rented it. This could be a friend, family member, the relative of a contractor, or the leasing agent.
Ensure that they possess a record of the inspection conducted during their move-in and the corresponding photographs.
A walk-through of the property with the tenants a few days before they move out can allow for an explanation of what is required to receive a full security deposit refund.
The residents can schedule a time for the formal move-out inspection a few days after they have moved out.
Final Thoughts On Managing Rental Properties From Out Of State
With all of the above said, we prefer a hybrid approach to rental property management. Since we are passive income investors, we look at the management of property similar to what a CEO and COO of a company do.
We are the CEOs of the property, and the COO (Chief Operating Officer) are the one who runs the day-to-day business of managing the rental property.
There are a TON of other aspects of owning a rental property, including finding financing, accounting, business structures, taxes, etc. We recommend (and do) manage our rental properties remotely through an on-site property management company.
Final Tips On Managing Rental Properties Remotely
With all of the above said, we personally prefer a hybrid approach to rental property management. Since we are passive income investors, we look at the management of a property similarly to what a CEO and COO of a company do.
We are the CEOs of the property and the COO (Chief Operating Officer) are the ones who run the day to day business of managing the rental property.
There are a TON of other aspects of owning a rental property, to include finding financing, accounting, business structures, taxes, etc. We recommend (and do) manage our rental properties remotely through an on-site property management company.
Frequently Asked Questions (FAQs)
Q: What is remote property management, and why is it important?
A:Remote property management oversees and maintains rental properties from a distance, often out-of-state or out-of-country. It’s crucial for growing passive income portfolios and allows investors to live and invest in different locations. It involves rent collection, maintenance requests, tenant relations, and legal duties.
Q: What are the typical duties of a property manager?
A: A property manager is a local presence for out-of-state owners, handling tasks such as conducting market research, acting as a liaison between the investor and tenants, maintaining the property, keeping track of the property’s financials, and adhering to all relevant regulations and laws about landlord-tenant relations.
Q: What are the costs associated with hiring a property manager?
A: Hiring a property manager typically costs 8-12% of monthly rent. Additional charges may include a management fee, maintenance fee, leasing fee, and lease renewal fee. The exact costs can vary depending on the organization and region.
Kurt has gone from the financial lows of the ’08 financial crisis to personal financial success. He is a professional real estate investor owning properties in multiple states.
One of his passions is financial education and the pursuit of financial freedom.
You can learn more about Kurt here.