While having an investment property can be a smart part of your total investment portfolio, for out of state landlords it can be a headache to take care of both the tenants and the property. Whether because your job moved or for any other reason, if your income property is out of state it can drive you out of your mind. Here are five good ways to get the best from your out of state property, and whether you should consider selling.
Tip One – Leases and Repairs
Of course, with an out of state rental property you are never going to do month-to-month rentals and only yearly leases. When you write up that lease, be sure it has a clause in it that states the tenant is responsible for all smaller repairs under $1,000. You may have to offer a better deal on the rent, but it will be worth it to not have to manage fixing clogged drains in sinks or other smaller repair items. Also, if you are up front about this you will probably attract a tenant who is handy and loves the idea that their skills will get them a better monthly rate.
Tip Two – Replacing Tenants
Although you will sign your tenants for a one year lease, if not two, sometimes things happen and they have to leave before that lease term is up. When they do, you should have already had them sign off in their lease agreement that they will be the one responsible for finding you a new tenant to complete the lease term. With timed leases this is a reasonable requirement and will save you the time and money of coming out to review new tenants unexpectedly.
Tip Three – Tenant Choices
One of the best ways to make being a long distance landlord easier is to choose tenants who will be responsible and continue to lease for years. While a credit check is a given, you will want to go beyond this and run a very detailed background check that includes talking to references and past landlords. If they move frequently or have small children or pets you might want to reconsider that lease. Ideally you want someone who is relocating because of work and has owned their own home in the past. They are most likely to be looking for a long-term lease solution and will be familiar with basic home repair jobs.
Tip Four – Management Companies
You can bypass all of this if you decide to hire a property management company to do all the tenant handholding for you. While these types of arrangements can cost you as much as between 5-10% of your rentals, they could also be worth it for you. A good experienced property management company will not only find tenants and collect rents, they will recommend annual maintenance, provide services to keep property in good order and often provide rental data and an annual report for your taxes. If you are considering more than one property they are an excellent way to protect your investment with a minimal amount of work on your part.
Tip Five – Know Your Investment
While having an out of state rental property is not an investment for everyone, it is a great way to diversify your investment portfolio. With the right property and some careful planning, it can be a source of income or even a backup plan for retirement. But sometimes that long distance investment property can become a nightmare. If that is the case, the smart landlord finds a buyer and moves on.
Whether looking to find the right one to buy or getting rid of one that no longer works for you, having a real estate company with experience in long distance investment properties can be a big help. Whatever your reasons, come and see us to find out the best approach. We have experience with the needs of long distance landlords and can help you find just the right solution to your rental property needs. We buy houses – Get an offer today.