As promised, I was asked a question so now I’ll be answering it in a mini post!
For those of you that don’t know, I currently have one rental property. It’s a single family home and the current tenants just renewed their lease. They are my third set of tenants.
Managing A Rental Property From Afar
How hard it is to manage a rental property from afar is going to depend on a variety of factors, but probably the most important is how you feel about being a property manager. Good tenants who follow a well written lease are also very important.
For my first set of tenants, I did not have any help or property manager. I rented to a family member so I didn’t feel there was a need for one. I know a lot of people probably think I’m crazy for renting to a family member, but I know this person very well and I know how they treat their houses. I basically could not have had a better first tenant. Zero concerns with this one (I was living nearby for most of their time in the home).
For the second and third set of tenants, I’ve continued to self-manage my property. By that I mean I am still in charge of all leasing, financial, and repair/maintenance decisions. However, I do have someone with the authority to arrange maintenance and repairs on my behalf since I obviously can’t fly there every time the air conditioner acts up or painters need to come in. This is a legal arrangement via a power of attorney.
This has worked well so far. My second set of tenants were a headache, but I stuck by what the lease said in all matters and got through it. My third set of tenants are just as good as my first set, and I’m not just saying that because they might be reading this 😉 They should know I appreciate how well they’ve taken care of my house!
Do I like managing a rental property from afar?
All that being said, I’m not a huge fan of being a landlord. That has nothing to do with being a long distance landlord (it might bother me more to be local!) and everything to do with the fact that I crave simplicity in my investments. Do you see the tagline under my blog title? That’s not just for show.
Financially my rental property has been a good decision. I’ve done the math and it’s worked out roughly as well as if I’d put all of that money into the S&P500 years ago. That is saying something considering how well the stock market has done for the last decade. But I don’t love it.
If I had put the money into the stock market instead of buying a house, I wouldn’t have had to pick out a washer/dryer set. I never would’ve had to choose paint colors. And I never would’ve heard somebody complain that the garage was too big (that was an actual complaint!).
So…it’s fine. I don’t love it, but I don’t hate it. Managing a property from afar isn’t really too big of a deal if you have good tenants and a good lease. But if you like simplicity, there are better options.
Property management
You could hire a property manager, but that will eat into your profits. And ohhhhhhh the horror stories I’ve heard.
If you are going to hire a property manager, I hope you’ve done your homework. And I don’t just mean reviewing the prospective PM.
I mean understanding that a property manager is not going to treat your home like a magical oasis that must be maintained in pristine condition every second. I mean you need to understand that they will treat it like property that helps you make an income. And that people – real live people – will live in it.
I find that a lot of people who don’t like being a long distance landlord are upset because the house isn’t kept to their standards. Well, that’s what happens. When you are a long distance landlord, you lose control. Heck, that happens even if you’re a short distance landlord. If someone else lives in your property, you are going to lose some control over what happens there. It’s part of the game.
(Plenty of people I know love their PMs, so I don’t want it to sound like I’m disparaging them. I’m definitely not! I find that most PMs do their job as agreed to, just maybe not as the owner expected. Realistic expectations are important.)
Or….
You can always invest the money in stocks. Or if you like the thought of real estate investing but don’t want to manage from afar, you can look into Real Estate Investment Trusts.
Or one of a thousand other options that don’t involve answering phone calls about whether you approve the latest repair.
Okay, that’s enough for this not-so-mini post. Yes, typing an entire post on a phone is hard, Ms Fiology! Fun fact: I’m not actually sure how to figure out how long this post is using the WordPress app.
Wait wait wait… what was the complaint about the garage being too big?? I’m so confused. And you can check word count at wordcounter.net 🙂
Yep. It’s a two car wide, two car deep garage, meaning there is room for a full workshop/storage area plus two cars inside. And the feedback from the husband was that he didn’t like it.
Thank you! Yeah, it is sounds like I imagined – harder and more work than investing in the market BUT with a greater pay off. I do like the thought of having a hedge against inflation so I’m pretty sure I’ll enter the real estate market in the nearish future.
Self-managing from afar but giving someone the authority to schedule maintenance sounds smart. Do you pay this person with said authority? I assume so but wanted to ask.
I don’t appreciate the diversity of real estate enough I think. When I’m thinking about it I love it, but all too often what I’m thinking about is the hassle and not the benefit. While I don’t love being a landlord, I do recognize that benefit and I’m open to more property in the future if I can find a good deal.
I am managing my San Antonio house from Doha Qatar. If you haven’t heard of http://cozy.co, it really has helped the administrative parts of renting.
😂😂😂😂🤣🤣🤣
I know people won’t understand why I’m laughing but trust me, something he wrote was funny.
our painters start today. we picked colors about 6 months ago. every time mrs. smidlap brings up the detail of which blue to use and what color will go where i just glaze over in a stupor. i just want it done.
Yeah I enjoy picking one color – one – and then I want it to be done already.
Was this when you decided to buy a house at a duty station or was this simply because you wanted to try your hand at a rental property?
Both?
I bought at a location I knew I was moving to, but it was always intended as a rental.
Wait, I’m sorry, the garage was too big? Uh, don’t use all the space then?
Stock investing is what I’m doing because it’s all I can afford right now. And yes, at least it doesn’t call me in the middle of the night saying there’s a leak. I’m the one doing that to my landlord 😂
Also: dividends don’t sell drugs!
How did you show prospective tenants the house from long distance? That was my biggest hurdle with a long-distance rental and we ended up using a PM company. Luckily, the PM ended up being great, but suffice it to say, we ended up selling the house and I don’t miss being a landlord.
First tenant: I didn’t choose a house to buy until my prospective tenant approved it. He went on house tours with me. I was buying it for him to live in. No background check.
Second tenant: a family member showed them the house, and I reviewed their file from afar. Partly it was scanned docs delivered email, and partly I used an online background check service.
Third tenant: tbh I can’t remember if they saw it in person before moving in. I think so? I definitely sent them pictures. If they did see it in person, then it would’ve been a family member who let them in. They were preapproved because I knew the husband.
I did this for about a year and a half. I had such a hard time with my PM company. I just don’t think we were on the same page with expenses/repairs. I don’t think they were doing anything shady or wrong but the communication just wasn’t there.
I think more than anything I learned the importance of being on the same page with PM company if that is the route you take. I learned more about myself during this time which is probably the biggest takeaway (for me).
I think if people were honest with themselves, this is what most would say. I’m on a few landlording forums and so many questions are along the lines of “I wanted X but my PM did Y” and much of the time, its stuff that could’ve been resolved with clear rules and communication from the beginning. It’s good to hear you learned that lesson. Do you still have the house? If so, did you fix it by finding a new company that meshed better with you, or by resolving the issues with the first company?