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I hate for this question to be overly general, but I think the problem is that I don't know what I don't know. My wife and I are thinking about becoming a long distance landlord/landlady, but having never done it before, we aren't confident that the investment is worth the headache of dealing with tenants over a distance.

Does anyone know whether a good property manager is capable of sufficiently reducing the hassle? Are there some other things to consider before making or breaking off from the purchase?

Some additional details:

  • We are familiar with the area, having lived there ourselves recently
  • Buying locally isn't advantageous currently for a couple of different reasons
  • We do not have family in the area, but do have some good friends to check up if needed
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    Are you buying with cash or planning to take a loan? What country are you in?
    – D Stanley
    May 8, 2017 at 16:27
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    Yes, a "good" property manager should be able to reduce the hassle of being a landlord (long distance or not). I would advise to really vet them before you hire him/her.
    – Michael
    May 8, 2017 at 16:30
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    I know it isn't the point of your question, but note that interest payments directly reduce your return (as do property management fees). All that to say I would make the investment is still the best option or if other more passive investments won't give you a better rate of return for similar risk. I have looked into rental property a few times, and every time the returns on my passive investments are better unless I can pay with cash.
    – D Stanley
    May 8, 2017 at 16:55
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    How long is the distance? One-hour drive, four-drive, airfare-required? How often do you expect to be there to visit?
    – Ben Miller - Remember Monica
    May 8, 2017 at 19:06
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    What things would you be willing to handle yourself and what things would you be willing to pay someone else to do? For example: Advertising for tenants, vetting tenants, cleaning/painting between tenants, collecting rent, handling repairs, annual inspections, taxes, police calls, fires and other things that require interacting with insurers, evictions, and lawsuits by tenants.
    – Mark Plotnick
    May 8, 2017 at 20:26

7 Answers 7

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The main work that a property management company does is finding you a tenant. After that, they may provide handyman services at a decent rate, but for the most part they'll just be making the same calls that you would make to a plumber/electrician,etc. on the occasions where something goes wrong.

I'm a landlord and like to handle repairs myself, my sister is a landlord from a distance, when a tenant is leaving, she takes a trip out, has an open house on one weekend and picks a new tenant from there. The expense of the trip offsets some rental income, which works out nicely if it's a place you want to go once in a while. Otherwise, when there are issues she just calls an appropriate service company and coordinates with the tenant to get it handled.

A property management company, in my view, doesn't do enough to earn its cut, but if you really want to be hands off then it's probably the best way to proceed. Finding an individual to manage your property could save you some money over a property management company, but will probably be harder to find and you've got no redundancy like you would with a management company with at least a few employees.

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    As a former landlord: A property management company can arrange maintenance and check that it's really done. They should know local maintenance people and have regular contact with them, which you as a distance landlord probably don't. Some property management companies are big enough to have their own maintenance people, which reduces costs. I tried long-distance landlording without a property manager and found it very difficult.
    – Jay
    May 8, 2017 at 20:47
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    As a current landlord: My property manager gets a nontrivial discount from repair and maintenance services. Even after their markup I still come out ahead.
    – chrylis -cautiouslyoptimistic-
    May 9, 2017 at 3:55
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    @chrylis What's the monthly take? When I shopped around it seemed mostly 7-10% of rent for property management. Seems like you'd have to have a ton of discounted repairs to come out ahead. Or did you just mean you still have positive cash flow? I imagine there will come a time when I'm less inclined to handle things myself, and it would certainly be more tempting if I had rentals in other states. To each their own, for sure.
    – Hart CO
    May 9, 2017 at 4:15
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    @HartCO I come out ahead on repairs vs. what I'd pay if I were calling contractors--I don't come out ahead on the management fees overall. (I think those are worth it primarily because they find tenants who actually cough up the rent on time.)
    – chrylis -cautiouslyoptimistic-
    May 9, 2017 at 15:44
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    @HartCO The two PMs I worked with both charged 10%. As I was charging $600-some-odd rent, that was about $60 per month. Not counting repairs when tenants trashed the place, I probably average $2000 per year in maintenance. (Not checking my records, just rough guess.) So I doubt any discounts on maintenance made up for what the PM cost, but it helped.
    – Jay
    May 11, 2017 at 18:19
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I did the long-distance landlord thing for a couple years and it was a disaster.

Our first property management company skipped town with our deposit, and a lot of other clients' deposits as well. I never recovered the money.

Then the next property management company completely mismanaged a situation, nearly escalating it to a legal issue where a simple, mutually agreeable (between myself and tenant) nonlegal resolution was available.

That's just on the property management side. The tenants were difficult too. You didn't ask about that so I won't go into it.

Both property management companies came highly recommended.

Suffice it to say that my wife and I eventually decided that it just wasn't worth it and we sold the house at a loss.

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    "Our first property management company skipped town with our deposit, and a lot of other clients' deposits as well" - That sounds more like a "guy" than a company... and it also sounds like you didn't do your due diligence before contracting this "company" either. Nor does it mean all property management companies (real ones, not fly-by-night popup shops) would take your relatively meager deposit and run since it means missing out on a lot more money over time. Sorry you had a bad experience, but seems you're mostly to blame and simply were not ready for this type of responsibility.
    – SnakeDoc
    May 8, 2017 at 21:10
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    Naw, it was a company. It had a number of employees who found themselves with no jobs after the owner bailed. But I agree with everything else you say.
    – user13593
    May 8, 2017 at 21:29
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    Sorry to hear all that. Sometimes you just get dealt a bad hand. Under different circumstances, it could have been something great for the both of you. Hopefully it doesn't shy you away permanently.
    – SnakeDoc
    May 8, 2017 at 21:36
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    Yeah, for sure my story is just one data point. The takeaway for the OP is that if you're going to do this, do that due diligence so that you don't end up telling Internet war stories. No plans to get into it again but you never know.
    – user13593
    May 8, 2017 at 21:50
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    +1 for the "completely mismanaged a situation" bit. I've been on the tenant side of this, and dealing with Ann incompetent property management company made everyone's lives much harder than they had to be. Make sure they'll at least contact you if an issue comes up that they don't want to/can't deal with.
    – Kat
    May 9, 2017 at 22:32
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It would appear that people have different experiences with the management companies, and that's to be expected.

For what it's worth, in some areas of the world (Australia, probably others), it's basically expected that you run your rental property through a management agency, regardless of where you live. That's not to say that everyone does, but it's very common.

For example, I live in New York but I own a house in Sydney, Australia (that's around 10,000 miles away if you're keeping track). We are currently planning to buy a second property in Australia (in a different city from Sydney). Our management company does everything. They find tenants for the house (we approve them), they do inspections, chase late rent, tell the tenants to clean the mould off the bathroom tiles, and they take care of all of the repairs. They even pay the bills for us (we have their address set up with our local billers). We've literally never met or spoken to our tenants in person - only on paper when we approved them to move in.

They collect the rent money from the tenant, use that rent money to make repairs and pay bills associated with the property. At the end of the month they deposit the left overs into our account. Each month, and the end of financial year, we get a statement showing income/expenses and graphs, etc, along with any items we need to attend to.

Our agent takes a % of the rent each month - around $120/month. We are also renting at the top of the market and are taking in a fair amount of cash each month. The lower your rent, the less fee they take.

My parents did this for 15 years - they owned two properties. One of them was 2 hours drive away and one was 10 hours drive away. Both times they had very little issue.

So I wouldn't let a few negative stories put you off. If you find a good company that you can trust, you can do this. Especially if you can't afford to invest in the area you live in, but want to invest in a more affordable area.

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    This is exactly the experience I have had as a long distance landlord.
    – bishop
    May 9, 2017 at 0:21
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    Ditto. In the UK, they're called letting agents, and in addition to what Mark describes, they also usually handle tenant referencing (e.g. credit and immigration checks), all the essential paperwork and regulatory requirements (e.g. annual gas safety checks, deposit registration), and almost anything else that needs doing.
    – Steve Melnikoff
    May 9, 2017 at 11:00
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    In the UK, it's also common for letting agents to offer different levels of services, from full management (for a fixed percentage of the rent each month), to just finding and referencing a tenant (for a fixed fee), and often something in-between.
    – Steve Melnikoff
    May 9, 2017 at 11:02
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I have some experience of short-distance and long-distance landlording, and long distance sucks.

If you place any value on your personal time it will hardly be worth it unless you strike very lucky with good tenants and no major disasters. Otherwise you are stuck between trusting distant people (agents / trades) to sort things out properly, or burning lots of your own time & money on visiting and trying to sort things out yourself.

Also I'm amazed at the level of trust people are willing to place in rental agents and trades, certainly in the UK rental agents and estate agents are (rightly in my experience) viewed as being about as trustworthy as a Labrador at an archaeological dig.

If they know you're not easily able to pop in and check the state of things / work done they take every opportunity to get their favourite lowest bidder contractor in to half-arse whatever job needs doing and charge you top money for it. They also like to find minor faults they can kick up a fuss about in the hope you'll relent and give them the job of sorting it out.

I'm currently a short-distance landlord, and I set aside a % of the rental income as a contingency fund to throw at plumbers or whoever in event of a major problem, just on the grounds that I can't be available 24/7/365. Over long distance you probably need to set aside / make allowance for a fair wad of money per year to pay someone the minimum call out fee to go and change a light bulb each time one goes etc. etc. as some tenants really can't (or won't) manage basic stuff like that without burning the place down.

Hopefully you can identify a couple of decent local trades who you can trust to sort things out properly and not over-charge you. Round here, that's a massive "if", and even then it's not worth some guy in a van driving 10 miles up the road to change a light bulb for less than £50 no matter how trustworthy he is.

A thought exercise is to imagine you get a call at 2am on an inconvenient winter's day when you're due at work during the week, to tell you that the heating has broken, or there's water pouring through the ceiling, or something urgent like that which can't be put off - how do you sort it out? How much does it cost you?

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I was pondering the same thing with my condo in Herndon, VA and I happened to run into a woman in my building who had moved to Michigan a year earlier and become a LD landlord for her unit. She found out that a local property management company managed 22 units in the complex so she figured they'd be good. It started out fine. They found tenants and rent checks showed up regularly...until they didn't. She started making more frequent calls to the PM company and sort of got the run around. Turns out they didn't properly vet the tenants, a couple, and the man had a pretty extensive prison record. The woman made very little money...not enough to pay the rent. So when the man got arrested and went to jail, his partner just stopped paying the rent while still living there. The LD landlord ended up having to do all sorts of research and deal with the local Sheriff to figure out how to LEGALLY evict the tenant and hire someone to move out all their stuff and dispose of it. She had to take a week off of work and fly from Michigan to VA to deal with it all, and regretted ever renting it out in the first place.

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    This is less of an issue with being a long distance landlord and more of an issue with having bad tenants. Bad tenants can happen to anyone. Tenants can start out good and then become bad. I'm not seeing anything here that is an issue with going long-distance specifically.
    – Mark Henderson
    May 9, 2017 at 20:11
  • The fact that she was far away meant she couldn't do any follow up on her own. She couldn't reach the tenants by phone and she couldn't go knock on their door. She couldn't go to the property manager in person. She couldn't go to the Sherriff's office in person once the situation escalated. Because of all this, she had to take a week off work and buy a plane ticket back to VA, none of which would have been required if she were a local landlord and not a LD one. As you said, "bad tenants can happen to anyone" but this situation was particularly bad BECAUSE she was a long-distance landlord.
    – Hoonta
    May 9, 2017 at 21:25
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We currently rent from a large well known (USA) property management company that I would rather not name. Friend of ours actually owns the property. He told us that their fee is the entire first month's rent and then a percentage after that every month. As for handymen, they just call a vendor off a list from a nearby company, same as a homeowner would. They then bill the homeowner after the fact to cover whatever the repair costs were.

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I'm a landlord-from-a-distance, and it hasn't been a problem for me.

To make it easier, here's some tips:

The Property

Since it is harder to handle things at a distance, I recommend a setting things up before you ever have a tenant move in. If anything needs upgrading (hot water heater? furnace? A/C?) get it done first, so it is brand new, has warranties and in perfect working order before you are trying to coordinate repairs from a long distance. Buy extended warranties on anything you can. While they are typically considered an unwise investment for most people, the ability to phone-in a repair for no extra cost is a wonderful thing.

Insurance

Because you won't be around to catch problems early, review the insurance on your place, and make sure it is exceptionally robust, and can cover a wide range of problems

The Tenant

But it is VERY much dependent on the tenant you end up with. I've been lucky enough to have a self-sufficient and responsive renter. When minor issues do come up, it is usually little more than a phone call to a local handyman for repairs.
But if you have bad tenants, causing damages, not reporting damages, on short term leases with new people coming all the time, the situation could get much worse.

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