Absent Landlord Challenges: Navigating Property Management from Afar

In the ever-shifting landscape of today's real estate market, absentee landlords find themselves facing a maze of unique challenges. With approximately 11 million individual landlords in the U.S. controlling a vast majority of rental properties — a huge 71.6% — the sector is expanding and transforming in unprecedented ways.

What makes these challenges unique to absentee landlords? From grappling with property maintenance from a distance to ensuring compliance with local laws that vary from region to region, absentee landlords confront a complex web of issues that demand innovative solutions. Add to this the evolving dynamics of tenant relationships and market trends exacerbated by the pandemic, and you have a recipe for a market segment that is as challenging as it is lucrative.

This article uncovers the intricacies of remote property management, tenant engagement, and profitability in a market that refuses to stay static.

Understanding different types of absent landlords

These definitions will clarify the different ways that property can be owned and managed, offering a foundational understanding for anyone involved in the rental market.

Absent landlord

An absent or absentee landlord specifically refers to a property owner who rents to tenants but does not live on or near the property. The absent landlord might manage the property remotely, hire a property management company, or have minimal involvement in the property's day-to-day management.

Rental properties under an absentee landlord can range from residential apartments to commercial spaces. Absenteeism does not necessarily imply neglect; many absentee landlords are diligent about their properties and the satisfaction of their tenants.

A residential real estate investor may opt for absentee ownership for various reasons, such as investment diversification, relocation, or a preference for investing in markets with higher potential returns in an area far from their home location.

Absentee owner

An absentee owner is a broader term that can apply to any property owner who is not present at their property. This includes landlords of rental properties, but it can also refer to owners of vacant properties, vacation rentals, or investment properties that are not rented out. An absentee owner commonly delegates day-to-day responsibilities to a property manager or management company, enabling them to maintain a more passive role while still receiving rental income.

Owner-occupied landlord

An owner-occupied landlord is an individual who owns a property and resides in a part of it while renting out the other part(s) to tenants. They will personally oversee the management and maintenance of the property. This arrangement is commonly seen in multi-family dwellings, duplexes, or homes with separate rental units, like basement apartments.

Absent landlord responsibilities

The key to a successful absentee landlord role lies in efficient management strategies and strong communication lines that amply mitigate the physical distance.

An absentee property owner holds the same responsibilities as a resident landlord. They must adhere to state statutes, which dictate the standards for rental properties.

Maintenance and repairs

Maintenance tasks for absentee landlords might involve:

• Routine inspections and regular check-ups to detect any potential issues before they worsen.
• Gardening and cleaning to include upkeep of common areas and exterior appearances.
• Handling tenant maintenance requests promptly to align with legal requirements and ensure that tenants have a safe and habitable living environment.

From repairing a leaky roof to addressing plumbing issues, property owners should act upon major repairs promptly to maintain the trust and satisfaction of their tenants, prevent further property damage, and avoid any interruptions to the tenant's occupancy.

Manage tenants and finances

Property owners must establish and enforce rent collection policies as agreed upon in the lease. Despite being absent, landlords must ensure a seamless process for tenants to pay rent and have a clear method for handling late payments or delinquencies.

Delegate responsibilities

Often, absentee landlords will engage a property manager to handle day-to-day tasks. The property manager becomes the primary point of contact for tenants, addressing concerns and making decisions on behalf of the owner. Property managers should adhere to all relevant regulations and maintain the integrity of the property.

Insurance and risk management

Holding adequate insurance protects the property from unexpected events and provides a safety net for potential liabilities.

Property owners should be aware of the legal requirements in their property's location, remaining proactive and responsive to fulfill their duties effectively and protect their investment.

Pros and cons of being an absent landlord

Being an absentee landlord can potentially yield significant income, but it also has its drawbacks.

Pros

• Passive income: They benefit from a steady stream of rental income without daily involvement. A thorough understanding of the ideal rent collecting practices as a property owner can alleviate the logistical challenges associated with absentee ownership.
• Flexibility: Absent landlords are not geographically tied to their rental properties, allowing them to focus on other investment projects.
• Delegation: By hiring a management company, the property owner can delegate responsibilities, such as addressing potential maintenance issues.

Cons

• Maintenance challenges: Not personally overseeing the property may lead to delayed responses to maintenance issues.
• Property management costs: Employing a management company incurs additional costs, reducing overall profits.
• Less personal control: The property owner may have less control over the minutiae of property management, potentially affecting tenant satisfaction. One such consideration is whether to accept rent in advance. The property owner must weigh the pros and cons of advanced rent collection, balancing financial security against the potential for tenant-related complications.

Absentee ownership in real estate requires careful consideration of the balance between the benefits of passive revenue and the drawbacks of remote management.

Legal aspects and tenant-landlord laws

Tenants and rental property owners are bound by certain legal responsibilities. These obligations aim to protect the rights of both parties and maintain a fair and functional rental agreement. Notably, a property owner, whether living on-site or as an absentee, must ensure the property's habitability and safety.

• Duty to inspect: Property owners have an affirmative duty to conduct reasonable, periodic inspections to avoid unnecessary dangers, even when a contract requires tenants to maintain the property.
• Notice requirements: Tenants often possess the right to receive advance notice of a change in lease terms. In New York, for example, notices about an increase in rent range from 30 to 90 days depending on how long tenants have been in the rental property.
• Maintenance and rent responsibilities: Property owners are obligated to collect rent payments and ensure that the property is properly maintained.

These laws vary by location and may include additional rights and duties. For instance, rent-stabilized tenants may have the option for one or two-year renewal leases, highlighting the importance of local housing laws.

Absentee landlords should be particularly aware of how and when they might be held liable for negligence or failure to adhere to statutory requirements. It is their responsibility to familiarize themselves with the pertinent legal framework that governs their rental properties.

Bridging the gap: The role of management companies in absentee landlordship

In the complex world of absentee landlords, striking the right balance between owner responsibilities and tenant satisfaction is crucial. This is where professional property management companies play a pivotal role, linking absentee landlords with their tenants.

Employing a management company can be a game-changer. These companies take on the day-to-day operations, from robust tenant screening to ensure reliable tenants, to managing repairs and maintenance, thereby mitigating the effects of the owner's absence. They act as the landlord's representative, maintaining communication and ensuring tenant concerns are promptly addressed.

Financial management is another key aspect handled by these companies. They can implement efficient rent collection systems and protocols for handling late payments, balancing financial firmness with understanding to foster positive long-term tenant relationships.

Azibo provides absentee landlords and investors with peace of mind, knowing their property and tenants are in capable hands. Their expertise ensures a well-maintained property and satisfied tenants, which is essential for successful and profitable property ownership.

Absent landlord FAQs

How does absentee ownership work?

Absentee ownership in residential real estate often refers to a situation where an individual owns a property but does not occupy or directly manage it. The absentee owners may be individuals who have invested in rental properties, inherited properties, or own vacation homes that they do not reside in year-round​​​​.

What is an example of an absentee owner?

An example of an absentee owner is someone who inherits a family home and chooses to live elsewhere, renting out the inherited property.

What is the difference between vacant and absentee?

The difference between a vacant and an absentee property is primarily about occupancy. A vacant property is empty, without tenants or residents, whereas an absentee property is owned by someone who does not live there but may have tenants occupying it.

What is the main problem with absentee landlords?

The main problem with absentee landlords is the potential for neglect and mismanagement of the property. Since the real estate owner is not physically present, issues like deferred maintenance and tenant dissatisfaction can arise. Relying on a third-party management company requires trust and periodic supervision to ensure that the property is being maintained to the owner's expectations​​.