What Long Distance Landlords Need to Know
By Dawn Smith
Looking back at my family’s rental home history, I realized we’ve never rented a home from a local homeowner. They’ve always been long distance and, except for one, all military landlords. I have given this some thought and wondered why we haven’t had the typical landlord experience with the twice yearly meetings and the occasional inspection requested.
Likely it’s because I’m picky about where we live and savvy military members capitalize on ideal but military saturated locations. They, however, are stationed somewhere typically far way, and don’t have the time or money to make the trips to check on the property on multiple occasions. Whether good or bad, I also believe there’s an element of trust between members of the military. Military landlords
have unwritten expectations from military renters.
Military landlords come in all sorts of shapes and sizes. Some plan to become long distance landlords, and others are dealt circumstances beyond their control and inadvertently become long distance landlords. Either way, both sets of rental property owners should determine the advantageousness of a property manager while they are away.
Intentional Long Distance Landlords
Military members have the benefit of many PCS moves to understand real estate at each duty station. If landlording is their "thing," then previous geographical knowledge of multiple locations courtesy of the U.S. Government puts them in a better position to become a long distance landlord simply by absorbing and understanding their daily lives.
- "Oh this elementary school is highly rated, so the rent I can collect for this potential neighborhood will be higher."
- "The area right off base is perfect for single soldiers who want an apartment to share with roommates."
- "The location of this train stop is very central. Renters will pay more for convenience."
The two to three years stationed at any base will also allow a military homeowner or renter time to become familiar with contractors, plumbers, handymen and even property managers if they are considering becoming a landlord in the future. It’s almost like the government is paying you to do real estate research
for a few years to enable successful transactions in the future!
With proper preparation these trial run situations can be invaluable for potentially beginning a real estate empire as duty calls from base to base or state to state. However, there are many circumstances when military homeowners become the opposite of intentional landlords. Meet the next group:
Accidental Long Distance Landlords
The military hands everyone an unwanted or unexpected experience at least a time or two during their careers. This can be exceptionally complicated for homeowners moving far from their current home. This raises the question, "What do I do with this house if I can’t or don’t want to sell it?"
There are typically four scenarios that accidental long distance military landlords find themselves in:
- Deployment or PCS orders have arrived quickly and left little time for a selling strategy.
- The new duty station boss awaits your presence ASAP, but the house isn’t selling.
- Failed inspections or appraisals set timeframes askew.
- Homes purchased pre-recession may have diminished profit potential.
Property Manager Pros and Cons
Whether intentional or accidental, military landlords have to determine if a hiring a property manager is worth their time and money. Landlord/tenant relationships can be tricky
, but add in an unexpected deployment on behalf of the homeowner, and the partnership can fall apart if repairs are neglected. On the other hand, why would a landlord give someone else their hard earned money if she can handle the common rental house problems herself or through a network of trusted vendors?
Here’s a look at the pros and cons that you may deal with when making the property manager decision.
Pro #1 Time Saver
Property management is their single job. It’s what they get paid to do, unlike the rest of us with day jobs and a landlording hobby on the weekends. Professional and competent managers should have zero problems solving everyday issues in a timely fashion.
Consider this: By time an East Coast renter waits for their West Coast landlord to awake at a reasonable time, hours have gone by in the rental where the problem is getting worse, or repair appointments are becoming booked. Local property managers would have called a plumber and had the clogged toilet solved before the sun rose in California.
Pro #2 Money Saver
On the surface, it doesn’t seem like it would be cost effective to hire a property manager. Not only are you spending money on home repairs and upkeep, but professional management companies will require some type of percentage of rent or a commission payment. But what happens if the landlord’s crazy schedule doesn’t allow for the necessary inspections or seasonal maintenance?
Well of course, additional problems! Problems which will likely require even more money than the monthly property management payment would have been in the beginning. Professional management companies will have detailed suggestions and schedules to be performed throughout the year. Heating and air vent cleaning, chimney inspections, and pest control are just the tip of the home care iceberg.
Con # 1 Property Management Doesn’t Mean Worry Free
Patience makes perfect. Finding a competent property manager is notoriously challenging. The research process is a little like dating or finding the perfect nanny for your child. At a basic level, managers must be effective communicators, savvy with technology, and demonstrate creativity for executing solutions quickly. Your landlording style has to mesh with the property manager to make the relationship smooth and beneficial for both parties.
a competent manager is just as challenging. Another round of the hiring process will take time, and there will probably be an experience or two when firing the management company
is necessary, thereby restarting the time consuming process of research and interviewing new prospects again.
Con #2 Complacency
Years may go by without a hitch in the homeowner/property manager relationship, but this doesn’t mean complacency can set in. As the homeowner, it’s ultimately your responsibility to set eyes on your property and inquire about tenants, lease terms, and contract changes with the management company.
Assuming all is well is not a guarantee the property manager isn’t coasting on his good reputation. Lack of communication on either party’s part is asking for expensive disappointments in multiple forms. Hiring someone to handle is your property is often a wise choice; checking out of the entire operation and expecting no issues is not.
a wise choice for many of your rental property needs
. Articles, blogs, and legal forms concerning all points of the process can be found at MBO’s website, which is packed with information.