Ask HN: What problems do you face when managing a rental property remotely?
What problems do you face when managing a rental property remotely?
44 comments
I have been a landlord for about 35 years, and a remote landlord for 20+. Since my wife and I are just now moving to another state for my new job, we just rented our home in Arizona, so we will now have two remote rentals.
My advice: be careful choosing property management agents. Get referrals and communicate clearly what you expect as far as them quickly fixing problems, providing receipts, etc.
My meta advice: prefer buying modest homes to live in, not MacMansions, and try to hang on to them as rentals as you move. It is a good way for someone in the "middle class" to accrue resources. It is better to live in a modest home and have separate income property than to just own a huge/expensive house that you live in.
My advice: be careful choosing property management agents. Get referrals and communicate clearly what you expect as far as them quickly fixing problems, providing receipts, etc.
My meta advice: prefer buying modest homes to live in, not MacMansions, and try to hang on to them as rentals as you move. It is a good way for someone in the "middle class" to accrue resources. It is better to live in a modest home and have separate income property than to just own a huge/expensive house that you live in.
> It is better to live in a modest home and have separate income property than to just own a huge/expensive house that you live in.
Explain this logic, please. How is it "better"? Using which criteria?
Explain this logic, please. How is it "better"? Using which criteria?
One criteria that may soon see a resurgence in popularity is that of morality. [1]
[1] https://www.currentaffairs.org/2017/06/its-basically-just-im...
[1] https://www.currentaffairs.org/2017/06/its-basically-just-im...
That argument would hold more water if the economy were a zero-sum game.
It's fine if the wealthy choose to give away some or all of their wealth, but it must be voluntary. Anything else is called "theft" - or the closely related concept of "taxation".
It's fine if the wealthy choose to give away some or all of their wealth, but it must be voluntary. Anything else is called "theft" - or the closely related concept of "taxation".
the article seems to be OK with it being voluntary (more or less?). I think it's just making the point that it's immoral not to give it away. maybe instead of "stealing" excess wealth we can just shame it more than we do now.
From the essay: "For example, it is sometimes claimed that CEOs get paid too much, or that the super-wealthy do not pay enough in taxes. My claim has nothing to do with either of these debates. You can hold my position and simultaneously believe that CEOs should get paid however much a company decides to pay them, and that taxes are a tyrannical form of legalized theft."
+1 thanks! that was a good read, and gave me a different perspective (or one I had not thought much about).
Sorry, I should have been more clear. For my wife and I, we value long term stability, wealth building, and flexibility more than an extravagant home to live in.
I totally understand people who prefer a better current lifestyle if a large expensive house makes them happy.
I totally understand people who prefer a better current lifestyle if a large expensive house makes them happy.
Not sure I buy that. The tax and loan guarantee advantages of your primary residence in the US are huge. It's almost certainly more advantageous in most markets[1] to put $N of real estate into a single residence worth $N than it is buy two $N/2 homes and try to rent one. Details matter, talk to an accountant, yada yada.
[1] That is, assuming a decent appreciation of home values. In Detroit, say, this advice wouldn't hold because the homes are worthless investments and you want the rent income instead.
[1] That is, assuming a decent appreciation of home values. In Detroit, say, this advice wouldn't hold because the homes are worthless investments and you want the rent income instead.
This is a bit of a naive view of the tax view within the US. I can't and won't compare the tax advantages of primary residences within the US to other countries, and they are good you're right. However, loan interest can be deducted as an expense on loans on rental properties. [1] This is not the only expense that can be deducted. Almost all expenses including your time can be deducted if you set things up properly.
As an investment vehicle, there are very few investments which can be diversified as much as rental properties. In my experience there are also very few investments with the level of return of rental properties. [2]
[1] I am not a lawyer, a CPA, or a tax attorney. I do have all three of these people on retainer. If you would like to know how set this up and make sure to get the most advantageous tax positions and financial positions from your investments, please hire people like this to tell you what to do. Also, do not forget to interview a few attorneys and tax professionals before hiring.
[2] My experience: I currently own 12 properties of three different rental categories in 3 different states.
As an investment vehicle, there are very few investments which can be diversified as much as rental properties. In my experience there are also very few investments with the level of return of rental properties. [2]
[1] I am not a lawyer, a CPA, or a tax attorney. I do have all three of these people on retainer. If you would like to know how set this up and make sure to get the most advantageous tax positions and financial positions from your investments, please hire people like this to tell you what to do. Also, do not forget to interview a few attorneys and tax professionals before hiring.
[2] My experience: I currently own 12 properties of three different rental categories in 3 different states.
Renting a home you can usually get back your mortgage (I have two rentals and they do).
Also cheaper homes will appreciate more. For example a $1M home can only go up so much if that's already the top end of a market but two $500k homes can go up a lot more.
Also cheaper homes will appreciate more. For example a $1M home can only go up so much if that's already the top end of a market but two $500k homes can go up a lot more.
But a McMansion would give you all those things too and work better at it. Oh I see, if you can actually afford it, that came to mind while I was typing this. Is your advice primarily against over leveraging?
Well, if you can afford a two smaller houses instead of your McMansion, the second house might be able to pay its own mortgage while accumulating in value, in addition to the house you currently live in.
But thats not what parent's comment was about either. And even yours seems to be about not overextending yourself so that you have disposable income/capital to do more with.
Is that the crux of your argument?
Maybe the general disagreement here comes from an inequality vein. You know, McMansions are nothing to brag about, they aren't like... real ... mansions. Just cookie cutter larger homes that are dime a dozen.
Is that the crux of your argument?
Maybe the general disagreement here comes from an inequality vein. You know, McMansions are nothing to brag about, they aren't like... real ... mansions. Just cookie cutter larger homes that are dime a dozen.
One risk in buying a huge/expensive house is that you might not use all of it. As a result, you end up paying property taxes and insurance fees for what amounts to underutilized housing space. Then again, if you have the wealth to buy an expensive house, it may not matter as much.
Are we talking long term rentals or short term rentals? They are both different animals.
Long term rentals have less issues. I'd say venting tenants if you are doing it yourself can be tough, although you can work with an agent if you choose.
Dealing with issues that are small, but need to be done, for example, dealing with a clogged drain, or dealing with a broken toilet in the middle of the night, are tough to manage. You can call a plumber, but prepared to spend a lot of money for something that can be done yourself without much trouble.
Short term rentals the biggest issues I've seen is the check in/check out process, cleaning, and being able to adjust to client expecations.
Some renters will have issues finding the location for a variety of reasons despite providing directions. This goes for finding wifi passwords, not knowing how or when to checkout, etc. Being there helps enforce these policies and deal with these small matters.
As others have said, prepping the unit with consistent quality can be tough as finding reliable staff isn't easy and their is high turnover.
For some context, my short term rentals are in the Caribbean, my long term rentals in the states.
Long term rentals have less issues. I'd say venting tenants if you are doing it yourself can be tough, although you can work with an agent if you choose.
Dealing with issues that are small, but need to be done, for example, dealing with a clogged drain, or dealing with a broken toilet in the middle of the night, are tough to manage. You can call a plumber, but prepared to spend a lot of money for something that can be done yourself without much trouble.
Short term rentals the biggest issues I've seen is the check in/check out process, cleaning, and being able to adjust to client expecations.
Some renters will have issues finding the location for a variety of reasons despite providing directions. This goes for finding wifi passwords, not knowing how or when to checkout, etc. Being there helps enforce these policies and deal with these small matters.
As others have said, prepping the unit with consistent quality can be tough as finding reliable staff isn't easy and their is high turnover.
For some context, my short term rentals are in the Caribbean, my long term rentals in the states.
How are your returns in the Carribean vs the US? In some cities, short term rentals in particular can offer great returns, but definitely not always the case.
I don't have a years worth of data to compare just yet. During tourist season, it's obviously more than what I could get than long term. This is about 2.5x as much profit than the long term, but during slow season, it's breaking even what a long term tenant would be in there for.
I'd also need to account for renting it for free to friends and family. I agree that short term in other US cities would be great, where my other properties are, I don't think I'd get much value out of it, especially when I'm usually in the USVI myself.
I'd also need to account for renting it for free to friends and family. I agree that short term in other US cities would be great, where my other properties are, I don't think I'd get much value out of it, especially when I'm usually in the USVI myself.
I've never sold a home, I just rent them out when I move. I've done long distance rentals both myself and with an agent. Finding a good agent is easier than finding a good tenant, and good tenants move out eventually and you have to find another.
A good agent will have a handyman on staff so you can get simple stuff fixed for a reasonable price, a network of contractors that do good work at a good price, and know what channels to advertise in to get good tenants in the local market. They also know the local market better, which means they can better optimize price vs time empty, and depending on how bad you are at that, that optimization alone will pay their commission.
A good agent will have a handyman on staff so you can get simple stuff fixed for a reasonable price, a network of contractors that do good work at a good price, and know what channels to advertise in to get good tenants in the local market. They also know the local market better, which means they can better optimize price vs time empty, and depending on how bad you are at that, that optimization alone will pay their commission.
Reliable cleaning staff is definitely the biggest challenge.
It's all too easy for unsupervised people to flake out hours before you have some renters with high expectations due to move in. Some may have the courtesy to let you know beforehand, others after the fact, and still others will bill you anyway.
Others may not have a consistent work ethic (spit and wipe a few spots and spend the next three hours checking Facebook).
Getting the reliability numbers up is very expensive. I'm starting to see maintenance staff take before-and-after pictures as part of their work.
It's all too easy for unsupervised people to flake out hours before you have some renters with high expectations due to move in. Some may have the courtesy to let you know beforehand, others after the fact, and still others will bill you anyway.
Others may not have a consistent work ethic (spit and wipe a few spots and spend the next three hours checking Facebook).
Getting the reliability numbers up is very expensive. I'm starting to see maintenance staff take before-and-after pictures as part of their work.
Supervision of cleaners, maintainers and repair contractors is a job for the business of property management.
Those people can't slack off or do a crap job if they have to report to a management company, with which they aren't affiliated in any way.
Property management is a solved problem; it's a problem that the very rich have (or big corporations) that own many properties in many locations. Even if you own a bunch of properties in the same metropolitan area, the same one where you live (so technically not remote), you can't be personally checking on everything that is going on in all of them; when on Earth will you have time for afternoon golf?
It's a special case of the structure of any big business. Someone making fries at MacDonald's cannot slack off simply because the CEO of MacDonald's is on the other side of the world somewhere.
Those people can't slack off or do a crap job if they have to report to a management company, with which they aren't affiliated in any way.
Property management is a solved problem; it's a problem that the very rich have (or big corporations) that own many properties in many locations. Even if you own a bunch of properties in the same metropolitan area, the same one where you live (so technically not remote), you can't be personally checking on everything that is going on in all of them; when on Earth will you have time for afternoon golf?
It's a special case of the structure of any big business. Someone making fries at MacDonald's cannot slack off simply because the CEO of MacDonald's is on the other side of the world somewhere.
The question posed here though is explicitly one about problems experienced operating that business though. If you're managing a property, remote or no, you're doing property management.
Reliable staff for just about any task. Before managing remotely I would have two reliable contractors for every type of job you might ever need: plumber, general contracting, cleaning, management, accounting, and legal. Having a trustworthy manager (and a backup) who can respond to emergencies is a huge help, and worth paying top money. Someone gets stuck without a key at 2am and you want to avoid the renter breaking a window or door? A good manager can resolve these types of things and you won't even know until the next day.
When we did short term rentals we even had the manager greet the new tenants, and take pictures in front of them, as well as meeting them for departure.
It's also worth it to set up a local telephone number that forwards to your remote number so everyone can still reach you. Unpredictable stuff does happen, and if it is something costly or big, you want to be in the loop.
Some people are going to take advantage of you, or at least try. Budget some extra money for this. Insurance may replace things eventually, but if you want to keep renting and your property description says there is a TV, you'll need to replace the stolen one right away.
When we did short term rentals we even had the manager greet the new tenants, and take pictures in front of them, as well as meeting them for departure.
It's also worth it to set up a local telephone number that forwards to your remote number so everyone can still reach you. Unpredictable stuff does happen, and if it is something costly or big, you want to be in the loop.
Some people are going to take advantage of you, or at least try. Budget some extra money for this. Insurance may replace things eventually, but if you want to keep renting and your property description says there is a TV, you'll need to replace the stolen one right away.
or buy a home warranty for less than $500 a year and with a phone call and flat fee they will send somebody to fix it!
This just echoes what everyone else says.
1. A living space just requires a lot of physical labor: gardening, repairs, maintain, etc.
2. You can outsource a lot and still have holes. Example: property management company handles everything. The dishwasher breaks. You order a new one. How do you co-ordinate that the installer and the delivery is at the same time? What if the person there doesn't want to deal with it? Can you hire someone to let the delivery in and store it till the other person comes? What if they don't show up on time?
Imagine scenario #2 x 100 over and over again.
1. A living space just requires a lot of physical labor: gardening, repairs, maintain, etc.
2. You can outsource a lot and still have holes. Example: property management company handles everything. The dishwasher breaks. You order a new one. How do you co-ordinate that the installer and the delivery is at the same time? What if the person there doesn't want to deal with it? Can you hire someone to let the delivery in and store it till the other person comes? What if they don't show up on time?
Imagine scenario #2 x 100 over and over again.
1) Bad property management company; response to situations; payment to me.
2) Demanding tenant; breaking things, bullying contractors, incurring costs.
Biggest problem: Property management company. I don't trust them to manage my house, and see that the tenant doesn't destroy it. A lot of my problems are things I never worried about, or thought needed to be fixed immediately, but my property management company has screwed me multiple times, but I can't afford to break the contract. My tenant is demanding, and exposing glaring holes in the lease.
Find a reputable property management company and get references. Talk to the home owners, real home owners, not property investors. Require the company to send your payment within the first month, don't let them keep that and earn interest off of it, choosing to remit next month, etc. Include strong clauses in the lease about property and appliance damage, detailed instructions in the lease for tenant maintenance (i.e. air filters), expand the section on pest control to explicitly state what you will, and won't do. Buy warranties on your central air, and if you can find a good place for it, on your appliances. Trust me on this one. Meet, qualify, and set up your own agreements with handymen, contractors, etc. Don't let the property management company do this unless you are absolutely clear on the costs, etc.
My saving graces for this house if my contractor, who is also the handyman, but has a rolodex of reputable people for all situations. Find someone like this, preferably an independent contractor in your area, and get to know them. Worth their weight in gold.
Biggest problem: Property management company. I don't trust them to manage my house, and see that the tenant doesn't destroy it. A lot of my problems are things I never worried about, or thought needed to be fixed immediately, but my property management company has screwed me multiple times, but I can't afford to break the contract. My tenant is demanding, and exposing glaring holes in the lease.
Find a reputable property management company and get references. Talk to the home owners, real home owners, not property investors. Require the company to send your payment within the first month, don't let them keep that and earn interest off of it, choosing to remit next month, etc. Include strong clauses in the lease about property and appliance damage, detailed instructions in the lease for tenant maintenance (i.e. air filters), expand the section on pest control to explicitly state what you will, and won't do. Buy warranties on your central air, and if you can find a good place for it, on your appliances. Trust me on this one. Meet, qualify, and set up your own agreements with handymen, contractors, etc. Don't let the property management company do this unless you are absolutely clear on the costs, etc.
My saving graces for this house if my contractor, who is also the handyman, but has a rolodex of reputable people for all situations. Find someone like this, preferably an independent contractor in your area, and get to know them. Worth their weight in gold.
Self-managed a long term (1 year lease) rental property remotely for 4 years, family worked in short-term rentals so I have some experience of that market too.
Main problem was peace of mind, knowing that tenants were there & not causing issues. Had a friend in the local area drive by every so often to make sure the place was in good condition. Let one do their own gardening, they let the place get run down so in the end mandated lawn/pool service for the tenants. The gardener was good at alerting us to issues.
Tenant changeover was hard and usually necessitated a flight down for a week or two to show the property (to a pre-arranged appointment list) and ensure move-in/move-out went smoothly.
Co-ordination was difficult sometimes (tenant reports an issue, get vendors out to triple-bid repairs, arrange for tenant to be there to let in vendors both during bidding and doing the work). Ongoing maintenance issues (the pool constantly leaked) were difficult to evaluate properly & had to trust our contractors.
Considered a property management firm but at 10% of the gross rent (and fees to find/place new tenants) on a property we were not cashflowing on we chose to manage it ourselves and it worked out alright. Short term I'd definitely want a local agent, too much to go wrong.
Main problem was peace of mind, knowing that tenants were there & not causing issues. Had a friend in the local area drive by every so often to make sure the place was in good condition. Let one do their own gardening, they let the place get run down so in the end mandated lawn/pool service for the tenants. The gardener was good at alerting us to issues.
Tenant changeover was hard and usually necessitated a flight down for a week or two to show the property (to a pre-arranged appointment list) and ensure move-in/move-out went smoothly.
Co-ordination was difficult sometimes (tenant reports an issue, get vendors out to triple-bid repairs, arrange for tenant to be there to let in vendors both during bidding and doing the work). Ongoing maintenance issues (the pool constantly leaked) were difficult to evaluate properly & had to trust our contractors.
Considered a property management firm but at 10% of the gross rent (and fees to find/place new tenants) on a property we were not cashflowing on we chose to manage it ourselves and it worked out alright. Short term I'd definitely want a local agent, too much to go wrong.
Generic advice for being a landlord.
Screen your tenants. Better to be vacant for months than let a bad tenant trash the place.
Make your money when you buy. Don't overpay and rely on appreciation. The property should cash flow from day one.
Screen your tenants. Better to be vacant for months than let a bad tenant trash the place.
Make your money when you buy. Don't overpay and rely on appreciation. The property should cash flow from day one.
I recently moved from Scotland to Finland, and kept my (paid off) property to rent. The biggest annoyance was that the property management company I picked couldn't be trusted.
Despite having positive reviews, even from friends, they were just terrible at dealing with any problems. I expect that all properties would have leaking roof, a failing appliance, or similar, over a long enough time. But each time something broke the company handled it in a terrible fashion.
From promising, but not delivering, pictures of damage, to getting estimates for repairs that were almost 100% bogus. The list goes on and on.
Of course changing management company once you've already got tenants in, and you're abroad is a pain in the ass.
Beyond that though I found that since I was abroad I was suddenly classified as a "non-resident landlord" which meant my income was taxed pretty harshly. I should have expected that, but it was just another surprise.
Largely to cut down on tax and currency-conversion woes I put the property on the market, and now I'm waiting for the sale to complete. Good news? The property was sold for a pile of cash. Again though taxes will be a pain, and I'll have to pay capital gains tax for the first time in my life. God help me if the brexit fiasco causes the pound to drop again, because that'll wipe out a lot of money.
Despite having positive reviews, even from friends, they were just terrible at dealing with any problems. I expect that all properties would have leaking roof, a failing appliance, or similar, over a long enough time. But each time something broke the company handled it in a terrible fashion.
From promising, but not delivering, pictures of damage, to getting estimates for repairs that were almost 100% bogus. The list goes on and on.
Of course changing management company once you've already got tenants in, and you're abroad is a pain in the ass.
Beyond that though I found that since I was abroad I was suddenly classified as a "non-resident landlord" which meant my income was taxed pretty harshly. I should have expected that, but it was just another surprise.
Largely to cut down on tax and currency-conversion woes I put the property on the market, and now I'm waiting for the sale to complete. Good news? The property was sold for a pile of cash. Again though taxes will be a pain, and I'll have to pay capital gains tax for the first time in my life. God help me if the brexit fiasco causes the pound to drop again, because that'll wipe out a lot of money.
Considering either selling my house or keeping it as a rental. Trustworthiness and reliability of the management company are my greatest concerns. Will they be available when a tenant has an issue? Will they provide receipts when something breaks?
It seems like too much of a headache, so I will likely sell the house.
It seems like too much of a headache, so I will likely sell the house.
For people doing long distance single family detached house rentals, how do you make sure the general maintenance gets done? Things like lawn mowing, gutter cleaning, chimney sweeping, bush trimming, furnace serving, weeding around the foundation (damn Maple trees), snow removal, etc?
This seems like a lot to manage and I wouldn't trust a tenant to do it and some stuff requires tenant coordination. Seems like an annoying logistic problem to solve.
This seems like a lot to manage and I wouldn't trust a tenant to do it and some stuff requires tenant coordination. Seems like an annoying logistic problem to solve.
A friend who has been a landlord for many years suggested that I hire a home warranty for my rentals. I have been doing that for about 1 year now and it's working out fine. You pay an annual membership and then a fixed fee for every claim. They handle everything from finding a contractor, to dispatching and paying the service costs.
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As someone who owns a couple rental units, the prospect of being a rent-seeking gentrifier or a slumlord
Follow-up question (and I'm happy to create a different Ask HN, since this is kind of hijacking): How do you find, evaluate and purchase a good rental property remotely?
"What problems do you have with absentee landlords that don't even live the same state as you?"
Are talking about short-term airbnb type stuff, or like a long-term apartment or house?
Getting it cleaned by somebody who won't steal your stuff is a challenge. They can just say that it was taken by the renter.
You mean like copper piping?
Or is your rental furnished?
Or is your rental furnished?
Lol... I'm talking about a furnished one. A relative of mine had an furnished unit they rented out and I remember this was an issue. They paid a pretty expensive cleaner as far as cleaners go, but thought it was worth it.