Must-Know Tips for Absentee Landlords
If there's one constant through the history of rental real estate, it's that being an absentee landlord is exceptionally tough. There are so many things that need to be taken care of, from marketing units to screening and interviewing applicants to selecting competitive rental prices.
Rental property owners also need to worry about undeniably unenjoyable tasks like monitoring their properties, collecting rents, performing maintenance and upkeep, and navigating local court procedures in the event a renter breaks the lease or fails to pay. A landlord's work just never ends.
If you're an absentee landlord and don't have someone to monitor your rental properties on a regular basis, things can easily go haywire.
Veteran landlords agree: When it comes to being a do-it-yourself, absentee landlord, don't do it without help. Here are some reasons why this is the case.
You Could Miss Important Warning Signs
Absentee landlords often miss signs of developing trouble on their properties. These warning signs can include junk cars parked on the front yard, evidence of drug or other criminal activity, a tree with a dangerous overhanging limb, or serious problems with soil erosion. These are all examples of things that can significantly affect the value and long-term rentability of your units. If you're an absentee landlord, you're clearly vulnerable to missing out on this vital information.
You could also miss important neighborhood trends that may portend a decline in value, such as the introduction of undesirable businesses (e.g., a strip club) or an increase in criminal activity in nearby properties, even if that activity doesn't directly include your own tenants.
You Can't Spot Check for Potential Maintenance Issues
One great way to catch maintenance problems before they arise is to knock on the door and speak with your tenants. Ask them if there is anything that should get repaired immediately. Often they'll point you to leaky pipes, minor roof leaks or other small issues that could get bigger if neglected. This becomes difficult, if not impossible, when landlords live far away from their rental properties.
(Of course, there are laws that govern landlords' access to their occupied rental properties. You can't just show up and insist on being let in. Most states require that you give one or two days' notice before going inside a unit, unless there's an emergency that needs to be taken care of.)
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The Local Government Could Turn Against You
If you own rental properties in one city but live in another, you pay property taxes but don't get to vote for local politicians or initiatives. Unfavorable ordinances, zoning laws, taxes and landlord tenant laws that can substantially affect the profitability of your investment can therefore be passed without you being able to do anything about it.
If there are many absentee landlords in the area, local residents could become fed up with some issues and take measures against landlords like you.
For example, the city of Middletown, New York, recently passed a law requiring rental property owners to hire professional property managers or provide master keys to on-site tenants. One involves some expense, the other involves risk. Either way, local landlords are not allowed to operate independently.
Another good example is rent control. Politicians in markets with exceptionally high demand for housing can impose rent control laws or other restrictions on charging the market rate for rental units. If you aren't a resident in the areas your rentals are located in, you don't get a vote.
Vacant Rental Properties Are Particularly Vulnerable
Renters are the most important set of eyes and ears when it comes to monitoring both the condition of rental properties and the neighborhood as a whole. But when rental units are vacant, you don't even have that... at precisely the time when your units are most vulnerable.
Unoccupied housing frequently attract vagrants and squatters, and in some cases have been used as meth labs--requiring decontamination that costs many thousands of dollars.
Special vacant property insurance can offer some protection if the home is unoccupied for more than 60 days. Standard landlord insurance policies won't cover some types of damage if the units have been left vacant for too long.
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