Out of town landlord, Use a property manager or not?

Question

Hi All,

This may seem like a strange question but at the moment I am a renter not an investor so maybe it will make sense.

I'm likely to rent a property from an out of town landlord. He offered to forgo a property management company if we can work out an arrangement and he would reduce the rent by about 10% (whatever the property managers rate would be). Is this a good idea? What pitfalls should I or my future landlord be aware of with this kind of arrangement?

Thanks,

Danny

Fred Heller · Answer

Is this a single family home with you as the only tenant? If it's any kind of multi-family property, and you're going to collect rent from other people, you will probably need a real estate license.

If it's just a matter of you living in a SFR home and communicating with the landlord about any issues that develop, then it's probably a win/win for both of you.

Lynn McGeein · Answer

If you are okay being there whenever repairs or maintenance are scheduled or emergencies pop up, it can work out fine.  If you are one of those who is never home or wants to call in a problem then come home from work and have it fixed, that won't really work with an out of town owner.  I manage one of out town right now where the tenant is fine as she is always home taking care of her grandchild, anyway.  I have great systems in place -- plumber, electrician, etc., that I can call and know they'll handle it, and I have family in the area in case of emergencies.  She's been there for years and it works well so far.  I have a property manager for the ones farther away where I don't have the same back-up plan available.

Derek Faller · Answer

Well I am not sure why someone out of town would want to forgo a property manager if they are willing to discount the rent by the same amount, but that wasn't your question. For you as the renter you would just want to be sure they are still able to have issues that come up in a timely manner. If something breaks and needs to get fixed are they able to coordinate someone to come fix it and have access to the property? Is the owner easy to get in contact with on the phone or is he unavailable during the day while he is working or at night when he is sleeping? I imagine something going wrong with the house would be the biggest issue you would have to worry about.

For the owner his concerns will be the condition of the property and if you are trashing it or not. Since he is not local he can't just drive by and look at it. Also if he is out of state he may not be knowledgeable about local landlord tenant laws and can easily find himself in violation of these if he is unaware of some of the rules. There are a lot of other things that could also become an issue for the out of town owner, but I don't want to get too carried aware with this post.

Account Closed · Answer

Danny,

If you feel you can openly talk to your landlord to deal with any issues, then I would say yes benefits you both. If your uncomfortable speaking up and asking for repairs, then I would say no.

Danny Szczotka · Answer

Thanks all for your responses.

@Fred Heller It is a SFR, and I don't mind coordinating work and doing minor fixes. This will probably save ~$100/month so it sounds like a good idea.

@Derek Faller Those are good questions to figure out. I'll be following up with him to make sure we have an agreement on how to handle repairs before we sign the lease.

@Lynn M. Thats good to hear that this system works for you!

Account Closed I'd say I'm willing to speak up when things are broken. I might be renting now, but it doesn't mean I like to live in the dumps.

Jennifer T. · Answer

I'm assuming the trade-off he/she is looking for in exchange for the lower rent is you take care of minor maintenance items and, if bigger repairs are needed, you coordinate with service people...and perhaps even find them.

If I were you, I would have your responsibilities included in the lease or as an addendum.  Something like that.  So it is very clear to both parties.

I even have a real life example.  My friend rented a home, owned by a local judge, and he basically told her, "The rent is a good deal (it was about 20% below market) because, in exchange, I want a maintenance free tenant.  I'm a very busy man.  Don't bother me with minor stuff.  If something breaks or needs to be replaced and it is under $100, I expect you to take care of it.  If something more major happens, I expect you to briefly let me know of the problem...get three quotes for repairs...and e-mail them to me."

She LOVED the arrangement and lived there for many years.  It allowed her to live in a gorgeous house, in a great neighborhood, that she would not have been able to afford otherwise.

I'm not necessarily recommending that specific arrangement, but I would want it outlined clearly how repairs are handled.  For example, "anything under $200, pay for it and fix it, submit receipts, and deduct from rent.  Anything over $200, provide me with an estimate and scope of work from two different contractors", etc.

Lynn McGeein · Answer

@Antonio Marte , No service contracts, just good working relationship from when I used to live in town, and they will schedule times with the tenant and bill me directly.

Antonio Marte · Answer

are these contractors under service contracts or do you just call them when necessary? thanks

Out of town landlord, Use a property manager or not?

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