Whether you are relocating and considering renting out your current home, have inherited a rental property in an area other than where you live, or are just looking to expand your portfolio into up-and-coming real estate markets, managing a rental property from a distance can have its challenges.
While being a remote landlord may change the way you manage your rental properties, many real estate investors have found success as long-distance landlords. There are several ways to overcome the obstacles and ensure that the distance won’t hinder the rental experience for you—or your tenants.
Tips to Finding Success as a Long-Distance Landlord
1. Build a team you trust.
Working with people you trust is a crucial step in any business, but this is especially true when it comes to an investment as paramount as a rental property. Whether you are just across state lines or across the country, if you won’t be able to immediately access your rental property, you’ll need to hire people who can.
Build a list of pre-vetted vendors, who will be readily available to fix any maintenance issues that may arise. It never hurts to research lawyers, accountants, cleaning crews, or painters in the area, too—you might need them at some point.
Take the time to get to know the neighbors and community members located near your rental property. Neighbors can be excellent resources for letting you know if they notice any suspicious behavior at your property.
You may consider hiring a property manager to oversee the entire rental process for you and ensure that things run smoothly in your absence. They will be able to assist with tasks like routine inspections, property showings, and checking in on small maintenance issues. Make sure that whomever you choose to manage the property is as committed to your investment as you are, and is experienced in managing rental properties.
2. Automate rental payments.
More traditional methods of rent collection may not be the best choice for you or your tenants when acting as a long-distance landlord. Obviously your tenants cannot physically deliver the check to you, and mailed rent checks have their own set of risks.
Modern trends in property management technology have made tracking and collecting rent payments online easier than ever. Look into a property management software service that has the capability to allow tenants to pay via automated clearing house (ACH), debit card, or credit card, so rental income will show up directly in your bank account without having to wait for paper checks.
3. Choose tenants wisely.
Tenant screening is always an imperative step to protect your real estate investment. It is increasingly important as a long-distance landlord.
Dealing with issues like late or unpaid rent, property damage, unreported maintenance problems, or even eviction become exponentially more expensive and difficult to manage remotely.
The only way to find trustworthy tenants is to properly screen applicants to learn about their financial history and rental stability. Keep an eye out for any red flags and pay attention to credit reports, rental references, income sources, and criminal records. When you do find good, trustworthy tenants, try to keep them around for as long as you can. Turnover can be an expensive proposition for any landlord, and even more so when you’re not there to manage the process.
4. Ensure you’re insured.
Standard homeowners insurance may not cover your tenants and their damages. Be sure to look into insurance policies designed specifically for landlords that will provide additional protection against the financial loss and obligations associated with your rental property.
Requiring your tenants to secure renters insurance can be an additional way to protect your investment. Renters insurance will not only cover your tenants’ personal belongings, but will also cover liability damages that your tenant may not have the financial means with which to reimburse you.
Related: Tenant Screening: The Ultimate Guide
5. Make time for house calls.
While resourcefulness and good planning can make up for the distance in a lot of aspects, the best way to know what’s going on with your rental property is to visit the property yourself.
You should make it a priority to pay your property a visit and do an inspection at least once a year. Your travel expenses will be tax deductible since they are part of your rental business. If you do find yourself stretched thin even with the tax write-off, you might consider hiring a property manager or reevaluate if this is a good investment option for you.
6. Familiarize yourself with local laws.
Every landlord should be familiar with the local laws and regulations that govern housing providers in the area where your rental property is located. While a knowledge of federal landlord-tenant laws is important, housing laws are oftentimes created and enforced at a state level. If your rental property is located in a different state than where you are located, make sure you know the state and local laws where your property is—not where you are.
7. Be flexible.
Landlording from a distance has its challenges, and you’re bound to run into some stressful situations along the way. If it turns out to be too difficult for you to manage, don’t hesitate to reevaluate the situation and find a solution that will work for you.
Choosing to sell the property and reinvest in something closer to home is always an option. Or you may decide to hire a property manager who can supervise the day-to-day tasks that come with managing a rental property. Because remote landlording is a very hands-off process, you’ll have to learn to trust your tenants and your vendors to make your investment a success.
It is entirely possible to manage a rental property from a distance, but it’s certainly not for everyone. With a dedicated and trustworthy team and by taking advantage of modern technology, you can successfully expand your investment portfolio regardless of where you live.
What obstacles do you foresee when it comes to remote landlording? Do you think these issues are solvable? Or do you think it’s better to sell far away properties and purchase something closer to home?
Let’s discuss in the comments.