Learning how to manage rental property remotely is a core principle of growing your passive income portfolio. The Wall Street Journal recently even coined the term “Laptop Landlords” for small investors who own and manage rental properties remotely.
Our own rental property portfolio completely consists of out-of-state properties. Property management is often considered the most important 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’ve changed our strategy for property management, the performance of those properties skyrocketed.
Couple out of state property management with remote management of said properties and it creates a unique demand for learning how to manage properties remotely.
- 1 Why Manage Rental Properties Remotely?
- 2 What is Property Management?
- 3 What Can You Expect Property Managers to Do?
- 4 The Costs of Hiring a Property Manager
- 5 Here’s Exactly How to Manage Your Own Rental Property Remotely
- 6 Final Tips On Managing Rental Properties Remotely
Why Manage Rental Properties Remotely?
The freedom you’ll have won’t just be limited to the extra time you’ll have. This means that you are not limited to one location for your income. Our own philosophy in our quest for financial freedom is that we want to live where we want, but at the same time invest where is makes sense.
You can rent a property anywhere in the world and have a passive income if you manage it effectively.
This is an example of the situation I am in: I live in Colorado, while my rentals are scattered throughout the remainder of the country.
There are two options to manage your property, either use a local property manager or attempt to manage it yourself.
A local property manager is the best solution. It’s a viable option if more expensive.
This article will tell you how to manage your rental property remotely, from anywhere in the world.
What is Property Management?
Property management refers to the various activities and functions associated with 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 is compliant with local regulations. Property management involves many activities and responsibilities related to owning and operating real property. These include managerial, financial, and legal duties. Third-party contractors who manage property are responsible for the day-to-day control of residential, commercial, or industrial real estate.
The 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 an individual or organization that foreign investors and owners hire to oversee and manage the day-to-day operations of their real estate investment. There are several reasons why 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 wanting to take 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 common 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 and/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.
1. Complies with all applicable Landlord-Tenant Laws and Regulations.
Although it may be difficult for a foreign investor to keep up with all landlord-tenant laws and regulations, it is still possible to do so, especially if the investor is familiar with the country’s laws. A property manager can help you avoid legal difficulties by taking care of these rules on your behalf. Property managers who work in a certain region are typically more familiar with the local laws and regulations.
There may be restrictions on the amount of the security deposit that a landlord can charge in various states. If a property owner who is unfamiliar with the area accidentally charges a tenant a deposit that is higher than what is allowed, a property manager who is familiar with the area may be better able to ensure that tenants are charged the correct amount.
2. Serves as an office for out of state owners.
A property manager is essentially a local presence for foreign owners and an expert on-site. This individual is responsible for the overall management of a property, making sure that it is up to code and running smoothly. If someone has 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 arise, such as maintenance and other operational issues, may be challenging to handle remotely for a property manager.
3. Responds to service requests.
A property manager or property management firm can also handle requests for maintenance and other on-site maintenance. It is important to have a manager on-site who can answer tenant problems right away. If a landlord takes too long to fix maintenance issues, it can upset tenants.
It is essential to have someone on-site who can deal with these issues as they arise. Tenants may request maintenance for a number of 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. It is very important to have a strong presence in the local area to deal with tenant concerns.
It’s critically important to make sure that reasonable service requests are quickly and efficiently handled. After all, owning and managing a property is providing an essential service to the tenant.
Our own standard is to ensure that properties are clean, safe, and efficiently managed.
4. Displays vacant units and leases them.
If you live out of state and you own a rental property, working with a property manager can help you avoid the financial loss that comes with having an empty unit for a long time. If you’re looking to rent out your property, you’re better off hiring a property manager to take care of finding new tenants and renewing leases.
Additionally, tenants may be hesitant or unable to move into a house without first viewing it. As someone who lives out of state, you may not be able to show off your properties. If you’re an owner, having a property manager enables you to have someone on the premises who can take care of any issues that come up and show prospective renters the full potential of the spaces.
5. Gathers and deposits rent.
As part of their responsibilities for the properties they oversee, property managers also collect and deposit rent. 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 property, which may include duties such as collections, evictions, and past-due payments. This text is saying that having a property manager take care of your investment property is a good idea because they will handle all of the responsibilities that come with owning the property effectively, and this will save the owner money and time.
The Costs of Hiring a Property Manager
The cost of working with a property manager or management firm depends on the organization and region. Typically, property managers will charge between 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:
1. Management Fee
Some property managers charge a flat price for their services, rather than a percentage. The cost of living varies depending on the business or person and the location, just as the percentage does.
2. Maintenance Fee
You will still have maintenance costs whether you hire someone to help manage the property or not. 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 in 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 local handy person and ensure that the tenant knows about the time when the crew will be on-site.
3. 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 fees associated with relocating and the costs linked with handling applications and renters. The price for this may either 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 rent.
4. Lease Renewal Fee
Some property managers charge a fee to tenants who wish to renew their leases. The cost may be a fixed amount or a part of the monthly rent, like the other fees. The fee includes the cost of the time it takes to get the tenant’s signature and renew the lease. However, a lot of property managers ignore this charge.
With all of that said, what if you still want to manage the property remotely, from out of state or even from 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 you can think of 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 2pm to 4pm. The homeowners invite you to an open house on January 14th from 2pm to 4pm.
Someone needs to be physically present at the property. You could ask a friend or family member to help you find a tenant, or you could pay a property manager a one-time fee of a month’s rent to lease your property for you.
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.
Next, run credit, criminal, and eviction reports. There are many websites online that offer the ability to charge fees directly to applicants.
This is great because it means you don’t have to worry about collecting 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. Make sure to 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, as well as a damage deposit. This can often be paid electronically. There are several different ways to pay rent online, including PayPal, Venmo, and other online rent collection services.
State-specific lease agreement packages with e-signatures are available, or the document can be imported into PandaDoc.
The only part of this process that you need to be physically present for is the move-in condition inspection. Make sure you get this document as part of your lease agreement, and have your rental agent take pictures that show the date and time!
You have dozens of options for collecting rent electronically.
Basic options include PayPal and Venmo. Although it’s frustrating for me to promote a competitor, TenantCloud is a popular option among small landlords.
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.
If you have tenants that you don’t hear from regularly, you should contact them every three months. This is just a reminder to check in and let us know that you are still managing 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
You need a small team of trusted local contractors to help you manage your rentals, whether you live next door or on another continent.
You’ll save money by hiring low-cost handymen 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 specializing in heating, ventilation, and air conditioning (HVAC), roofing, plumbing, and electrical work.
You’ll even need a local working crew service for clean-outs.
The better your relationship is with these contractors, the more successful you will be as a long-distance landlord. Hiring contractors can help you keep an eye on your property.
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 a an unfortunate, but sometimes necessary part of property management. When you’re managing rentals long-distance, they’re especially trying.
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.
There are many local companies in many states and cities that offer these services. You should have a plan lined up before you actually need it.
As a long-distance landlord, you need to take action straight away if your tenants are late 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. If possible, 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.
Make sure they have a copy of the inspection that was done when they moved in and the photos from it.
You could have the tenants do a walk-through of the property a few days before they move out. They can then explain to the tenants what they need to do to receive their 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 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.