With the right systems in place, with the right team behind you, and armed with the right knowledge, it’s perfectly possible to manage your properties from the other side of the world.
Create an ongoing passive income that feeds the life that you want to live.
We’ve said it before, and no doubt we will say it again. But there is no such thing as truly passive income. This doesn’t mean though, that you can’t put in place processes that will absolutely minimize the amount of time you’ll need to put in and the amount of work that you will have to take on.
So, what are these magical processes? And how do you set them up?
From our experience, there are a few key points that cause the most problems. In this article, we outline the essential parts to setting up your property management business to run it from wherever you are, to reduce your time, and to help avoid risks.
Filling vacancies and doing house showings are probably the most labor intensive part of owning a property. Which means it’s worth outsourcing this part to a leasing representative.
You could use a property manager that you hire solely as a leasing representative. Or if you know someone that you trust and you know will do a good job you could save yourself a little bit of cash and hire them.
The important part is that you can contact them easily and you trust them to take the role seriously. Agree on their fee beforehand. The first couple of times will be the hardest and will involve the most input and feedback from you.
It’s not just showing the property though. They will need to be on hand for the odd emergency. As well as there to do property walk-throughs at the beginning, middle, and end of the tenancy.
A leasing agent, not a property manager?
Whilst this isn’t true for all we’re sure, from our experience the problem with property managers is they are often too focused on your money. They eat away at your property profits with a carnivorous excitement.
It’s standard to charge you an 8% fee on your rent collections ongoing and a commission, normally a whole month's rent for finding the tenant. The worst one we had attempted to charge us additional fees for essentially doing their job. Every showing, property visit, walk-through, and phone call were extra fees on top of their 8% and commission.
If you want to be able to manage your properties from afar, then you need to be sure that your properties have good tenants.
Troublesome tenants will take up your time and cause you stress. And no matter how good the guys you’ve got on the ground are, dealing with bad tenants is not an easy job.
Good tenants are gold!
So screening your tenants becomes incredibly important. Learn how to screen tenants like a boss.
As with any business, communication is vital for success.
This is communication between you and your contractors, your leasing agent and of course your tenants.
There are various ways to set this up. When you’re abroad though it can be a little more difficult. Obviously having email contact is a good first step. But you need people to be able to get ahold of you in emergencies. And you need to be able to make calls.
Skye and Whatsapp offer reasonable solutions.
You can get unlimited international calls using Skype for around $16 a month - there are cheaper plans available depending on where you are that are worth checking out. Skype has the added benefit of being able to use a proxy number if you don’t want to give your personal number out to tenants - and you can use Skype on any device.
Alternatively, you could use an application like WhatsApp which will allow you to call internationally for free over WiFi. It just depends on whether or not you are going to have data or WiFi available.
Shit breaks. It just does. And yet a remarkable number of landlords seem to get caught off-guard when their properties need a bit of love.
When it comes to getting stuff fixed, and this is true for every landlord, but more importantly for those that are managing their properties from elsewhere - don’t hire the cheapest; hire the best.
Treat a good contractor with the respect they deserve and you will likely save yourself a lot of stress and heartache down the line. This isn’t of course a reason to choose the most expensive though.
You will want to build up a selection of contacts with specialist contractors who work in everything from plumbing, electrical, roofs, basements etc.
The most important one in your little black book of contractors though is a couple of versatile handymen who can quickly and affordably tackle all the little problems that pop-up. Worn out faucet, leaky S-bend, repainting…
Ideally, over time you’ll build up a relationship with them over time and with a single phone call be able to mobilize a whole army of skilled contractors to fix pretty much any issue.
The upstairs bathroom in your rental springs a leak which doesn’t get reported by the tenant straight away. The tenant calls on Wednesday to complain, telling you that that water is dripping through the ceiling and the light exploded. Your heart beats faster and panic begins to set in.
An unmitigated disaster!
You quickly call your key contractor but can’t get through! It’s okay though because you have backup contacts. You get through to the next person. They agree to head over that afternoon.
To be sure the situation gets resolved though, and because this is the backup guy, you call your leasing rep (who also has a key to the property) and ask them to head over and review the situation with them.
They both arrive, have a look. It turns out that there’s a leaky pipe and the water has dripped through the ceiling, getting into the light fixture of the room downstairs. It stains the ceiling, damages the plaster, and fucks the electrics in the light. The fix though is fairly straight-forward, replace the pipe, the light and repaint the ceiling.
Total estimate: an uncomfortable $500. Your leasing agent agrees to the scope of the work.
You book them in Friday morning to do the pipe and Wednesday the following week during the day to replace the light and repaint the ceiling.
You’ve got a bathroom out of commission till Friday, and a room with no light for the next week.
Thankfully, the latter problem has been patched by your leasing agent who has found a couple of tall standing lights to go into the room for the moment. The contractor has switched off the water to that bathroom until they can fix it - but there’s a downstairs bathroom so a minor inconvenience for a couple of days.
They call you when the work is complete. You pay the invoice. Problem solved.
You made a total of maybe five phone calls over this whole time, spent maybe an hour stressing and the issue was resolved.
Good contractors that you can trust then are worth their weight in gold - especially to a traveling landlord
Right, you’ve got the people, you’ve got the communication set up - now you just need an easy way to run your accounting, create reminders, run reports and the like.
This side of the business may not seem all that interesting, but you need to understand your cash flow if you’re properties are going to make a profit. Plus, if you don’t keep good accounts, at the end of the year you could end up paying thousands more in taxes than you should be.
We use the Landlord Studio which allows you amongst other things, to keep track of rent payments and expenses, generate professional reports quickly for your accountant, and automate reminders and invoices for your tenants.
The final step is setting up rent collection - which if you’re abroad can become a little complicated. You need a way to access this money without incurring the wrath and fees of your local bank.
First of all, we suggest insisting your tenants pay via bank transfer. If your properties are in the US, Zelle offers a great solution. Why? It offers instant, free, and secure bank to bank transactions. What you don’t want to happen is for them to be mailing you cheques! Who on earth uses cheques anymore… seriously.
Nor do you want them to expect you to collect cash. You can't afford to be chasing payments that have gotten lost in the mail, or wandering over every week in the hope to catch them at home and chase down your payments in person.
Now you just need to be able to access your money abroad…
Thankfully, the modern era of digitization offers an easy solution; an easy solution I’m going to complicate slightly to help save you some more money.
First and foremost you need to set yourself up a Revolut account. This is an international debit card that you can use anywhere in the world without fees. Plus you can exchange money into a large number of currencies inside the App without any fees.
However, what you can’t do is transfer from an American account into your Revolut account, plus Revolut isn't available in all countries.
You will also need a Transferwise account, which also comes with an international debit card. The reason I suggest going through Revolut is simply the lack of fees associated.
The advantage of Transferwise is international transfers.
Combine the two and you end up being able to get your money from American bank account all the way into another currency without having to [pay any transfer fees or exchange rate fees.
There are some associated costs if you are transferring large amounts of money - and it may be worth talking to a broker.
Conclusion and A Few more Final Notes
We’ve rambled on for long enough we reckon - but there are just a few more things we think worth noting whilst we are at it. Leave no stone unturned and all that.
For obvious reasons managing a renovation when you are able to visit the site and have face to face conversations with contractors is easier. But managing from afar is perfectly doable. You will probably need to evolve a system for this over time. A system that works for you.
Going digital will make getting all the documentation out of the way easy and manageable.
You can E-sign docs using programs like Adobe PDF Reader. But there are a number of solutions out there which makes e-signing quite easy and doable.
Using property management software means all your documents will be backed up online and accessible to you wherever you are.
It’s worth keeping all your document templates backed up online though - personally keep everything in a Google Drive which gives you easy access from anywhere and helps keep them organized.
Make sure you get a good quality landlord insurance that covers you from any disasters that might strike. We also suggest that you insist your tenants get renters insurance - landlord insurance doesn’t cover their belongings.
Okay, we are going to stop ourselves here. We hope you found this article helpful! We would love to hear your thoughts on how to manage your properties on the go and from afar in the comments section below!
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