Long-Distance Rentals - What Are They? And Are They a Good Idea?
Renters Warehouse Blog
Long-distance rentals are a great way to generate more revenue, and offer landlords a number of benefits. You can be out of town, out of state, or even out of the country and outsource the management and other responsibilities to a property manager who will take care of things for you in your absence.
But what exactly are long-distance rentals? How do they work? And are they a good idea?
In this article, we’ll answer all those questions and more. If you’re a landlord and want to know more about whether long-distance rentals will work for you, read on.
What Are Long-Distance Rentals?
Long-distance rentals are properties that you rent out and manage remotely from a distance. The main advantage of this is that it opens up your options, allowing you to invest in markets that are outside your own local area, giving you more choice, and allowing you to secure a better deal in a better market.
The other great thing about long-distance rentals is that you can invest in as many properties as you’d like. You can diversify to invest in properties that are spread out and located in different markets, or if you’d like, focus on investments in just one or two markets where rentals are performing especially well.
When done right, long-distance rentals can offer some excellent returns. Here’s a look at some more benefits that come from investing in long-distance properties.
Thinking of buying a new rental property? Check out this guide on: How to Assess and Survey a Potential Property.
Benefits of Investing In Long-distance Rentals
Long-distance rental properties can be a great investment largely because they give you options. You can invest in an area where properties are more affordable, look for an area where cash-flow returns tend to be higher, or find a market where appreciation is higher than average. But how do you decide whether or not you should invest?
Here are some of the benefits of investing in long-distance rentals:
- Better Investment Opportunities
First and foremost, the best thing about going long-distance is the wealth of choice that’s open to you. By looking in markets across the country, you can find the very best investment opportunities, meaning you can find property, and a market that meets your exact specifications. For instance, you can look for a location where property is more affordable where you could potentially get more for your money, or find a market where properties tend to produce excellent cash flow. You can also find a place that has seen consistent long-term appreciation as well. It’s entirely up to you. Just make sure you take the time to establish your big-picture goals up front to determine what you’d like to get from a property, then begin your search. Likewise, once you begin your search, make sure you consider factors like the availability of local contractors, property management services that are available locally, and most importantly, the local market conditions.
- You Can Set It and Forget It
Your long-distance rental is going to require maintenance and repairs and you will still need to be responsive to your tenant’s needs whether you are 20 miles or 200 miles away. In most cases, it makes sense to hire a property manager to take care of your rentals for you. Of course, this is something that you can do with properties that are in your own local area as well, but when your property is just down the road, it can be tempting to step in and oversee your property yourself. While there’s nothing wrong with managing your own property, over time though, many landlords find that this starts to become extremely time-consuming. Likewise, if you’d like to start investing in multiple properties, it becomes especially difficult. In order to create passive income that’s truly passive, you’ll want to ensure that you set your properties up to operate independently of you.
Long-distance rentals are an excellent solution for landlords who want to set their properties up for success and then be able to focus on other aspects of investing. You’ll still have some responsibilities as the owner, but it is good to know that you don’t have to worry about managing day-to-day operations.
Ready to start making your rental income passive? See: Are Rentals Passive Income?
- Professionals Are Handling It for You
Many responsibilities come along with being in charge of a rental property. You have to deal with repairs, maintenance, and the tenants themselves. But if you’re not physically near your rental property, it can be difficult to keep up with these things on your own. That’s where the professionals come in.
When you hire a reputable property management company, they’ll take care of all the details and help ensure your rental property is running smoothly. They’ll handle any repairs that need to be made, keep track of tenant payments and make sure rent gets paid on time—even if you’re not around. You can rest assured knowing that your property is in good hands.
- Diversification of Your Portfolio
If you invest in many properties locally, only in local real estate, you’re taking on a level of risk. If the area goes through a downturn, or if something happens to the local economy, you’d have all of your eggs in one basket. With long-distance rentals, however, you can diversify your rental holdings across multiple markets. If one area begins to struggle, you’ll have other areas generating you income or maybe even an area that is experiencing a boom and will be able to continue to generate revenue.
Are Long-distance Rentals a Good Idea?
Long-distance rentals offer a number of benefits: when done right. Now, let’s take a look at some of the important questions that you should ask yourself before you invest in a long-distance property.
If you’re considering long-distance rentals, ask yourself:
- Am I looking for passive income or am I looking to actively manage my rentals?
- Will this property help me to reach my financial goals?
- Does this market meet my goals for appreciation and/or cash flow?
- Is there demand for rentals in this location?
- Is there reputable property management services available in this location?
- Are there local contractors available for plumbing, electrical, and general maintenance?
- What are the state and local landlord-tenant laws?
How Do You Manage Long-Distance Rentals?
Managing a long-distance rental on your own can be challenging, but it doesn’t have to be. In this section, we’ll go over the basics of how to handle your properties when you’re not physically there.
Here are some guidelines for landlords who would like to move into long-distance investing:
Find Good Tenants
Finding good tenants is key to managing a long-distance rental. If you’re looking for long-distance renters, start by screening potential tenants carefully. You want to ensure that the people who move into your rental will be responsible and respectful of the property and its contents, especially in your absence. Always ensure that you run credit, background, and reference checks. Of course, if you hire a reputable property management company, they will be able to do tenant screening for you.
If you want to find good tenants, avoid these 11 Tenant Screening Mistakes.
Get Insurance Coverage
If you don’t already have insurance coverage for your rental properties, now is the time to get it. Not only will your property be covered in case of an accident or damage, but it will also protect you against liability issues if someone gets hurt on your property. It’s also a good idea to request that any tenant who rents from you has their own renter’s insurance policy in place, as well.
Set Up a System for Communication
If you’re a landlord who does not live in the same town as your tenants, you may have trouble keeping up with what’s happening. After all, you can’t just stop by for a quick chat every once in a while. Instead, you’ll need to set up a system for communication—and all parties involved must be aware of how this system works.
First of all, make sure that your tenants know how to contact you. Give them your phone number and email address so they can reach out if they have questions or concerns about anything in the home, but make sure they respect any time zone differences.
Visit the Property When You Can
If you’re a landlord and you want to rent out your property long-distance, it’s a good idea to visit the property once in a while and do regular inspections. This way, you can ensure that everything is running smoothly and that there are no issues with the property—and if there are, you’ll be able to address them as soon as possible. If you’re a landlord who lives far away from your property and you don’t want to spend money on travel costs, then consider hiring someone else to visit it for you. Your property manager can do this for you. Make sure you arrange inspections with your property manager so that you can have peace of mind knowing that everything is well-maintained at your rental.
It is easy to get caught up in other parts of your life. But if you want to ensure your tenants are happy and comfortable, you need to make time for inspections. They can help you to avoid many disasters.
Automate Rent Payments
If you are a landlord, managing your properties can be a full-time job. You need to find tenants and make sure they are paying their rent on time. If you have long-distance properties, this can be even more difficult. One of the best ways to manage long-distance rentals is to automate rent payments. Having your tenants pay the rent via direct deposit is a good way to help ensure that you get paid on time every month.
Learn State Laws
When you’re a landlord, keeping track of all the regulations and laws that apply to your tenants is important. The last thing you want is to get caught off-guard by a law that you weren’t aware of. One thing you’ll want to do is learn about the state laws that apply to landlords and tenants. This way, if something does come up, you’ll have a good idea of how to handle it. You’ll also know what your obligations and responsibilities are, and the approach that you should take when it comes to different aspects of property management. Different states have different rules on everything from security deposits, to notice required to enter a property, notice for evictions, and more, so make sure you’re informed.
Hire a Qualified and Trusted Property Manager
Finally, if you’d like to set up your properties to operate independently of you, then you’ll want to consider hiring a property manager.
Landlords often struggle with managing long-distance rentals because they’re not on-site when something goes wrong. If you have tenants who live far away, consider hiring an experienced property manager who can handle all of the day-to-day work of overseeing a property for you.
A good property manager will be able to:
- Manage your rental properties in your absence—whether that means doing viewings with prospective tenants or collecting rent.
- Perform tenant sourcing and screening. This includes finding reliable tenants who pay the rent on time. They should be able to prepare rental agreements and run applicants through an airtight screening process.
- Handle tenant issues as they arise. This includes lease enforcement, and handling more complex problems like fixing plumbing leaks and painting walls.
- Keep an eye on the market so they know what’s happening in your area (and can advise you on how that affects your own rentals).
A good property manager will not only manage your properties for you, they will be able to operate in your stead to ensure that you get the most out of your investments. They can help to alert you when it’s time to raise the rent, and advise you on routine maintenance and compliance issues as well. With the help of a property manager, you’ll be able to focus on other things, instead of worrying about whether or not your tenants are paying rent on time or if there is something wrong with the unit.
Hiring a professional to help you with your long-distance rental is a smart move. They can help you find the right property, screen and manage your tenants, and ensure that everything goes smoothly with the rental as well.
Long-distance rentals are a great option for landlords who want to expand or diversify their portfolio. Just make sure you take the time to ensure that you have a plan for investing. Outline your investment criteria from the start, and do your research to ensure that you find a property in a market that will generate the returns that you’re looking for, paying close attention to projected cash flow and appreciation as a rate of return on your original investment. Finally, make sure you have the resources in place locally to help you oversee your rental: from boots-on-the-ground property management to contractors to perform necessary maintenance and repairs for you. With the right approach, you can help to set yourself up for success with long-distance rental property.
Curious how much you could be getting for your property? Find out by doing your FREE Rental Price Analysis today. See what your property could be renting for.
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