What Are the Responsibilities of an Absentee Landlord – Part I
Most people want to invest in something that will always generate a profit. Whether they want it as a secondary income or as their main income when they retire, it can provide as a safety net in case you run into financial hardships. These businesses include laundromats, dry cleaners, or being an outside owner of property that you can rent or lease—an absentee landlord. In this blog, we will discuss the role and responsibility of an absentee landlord, what challenges they face, and the right policy to protect themselves from irresponsible tenants. Make sure to contact H&K Insurance to discuss the proper coverage when becoming an absentee landlord.
What is an Absentee Landlord?
An absentee landlord, also known as an absentee owner, is an individual or entity that rents or leases real estate to another party, but does not reside on the premises.
When most people think about absentee landlords, the stereotype isn’t great. Most picture a landlord who takes money and doesn’t ever show his face. However, it is better to think of an offsite landlord as a great investor. Many investors turn to finding rental properties outside of their location because they have the potential to bring in a steady cash flow and establish a lucrative profit. Once they secure a property to rent out, it is up to them to manage it.
Most investors choose to take this approach because it is cheaper than hiring someone on-site to manage the property. It is not an easy thing to do, it requires getting through lots of challenges. Here are some of the responsibilities you will have as an absentee landlord.
Operating Managerial Work from a Distance
A lot of first-time absentee landlords do not understand the responsibilities that come from this role. Some of the challenges they can face include:
- Tenant Screening: You must make sure your tenants are trustworthy, which can be difficult from afar. You will have to hire someone to meet them, travel, or video call them.
- Move-In and Move-Out Processes: You can hire a trustworthy person to be your eyes and ears during check-ins and checkouts, or you can travel to the rental property each time (which is not ideal).
- Rent Processing: If you have a form of rent processing software, this should not be problematic and your tenants can be able to pay rent electronically every month. However, if you and your tenant are going to rely on standard mail, that is where many problems lurk. It is not uncommon for checks to get lost or the tenants “forget” to pay. Better to be safe paying for the software than sorry.
- Maintenance Orders: Costly and sometimes happen unexpectedly.
How to Protect Yourself
Most blogs and articles online discuss how the tenants can protect themselves from “greedy” landlords, but switch roles and how can the absentee landlord protect themselves from irresponsible tenants? Once you have all your standard insurance policies in place, such as renters insurance, dwelling fire, or a condo associations master policy.
Want to learn more about the responsibilities and insurance coverage options for absentee ownership? Ask H&K Insurance Agency’s very own Brian Kilcoyne, who specializes in providing risk management for unit owners. Make sure to keep an eye out for part II of our blog where we dive into subletting of properties.
