Moving overseas and still managing property

[Joel McGinley]

Hello all!  I have been managing my own properties (just 2) but am now looking to move out of the country.  So I might need a property manager.   So far I am seeing what I think are very high fees.  Finding renters here is NOT difficult. They keep the first months rent (which is high in my area +3500.00 a month).  They then take 10% of the rent each month.  They find and screen tenants (which is easy here in FL) and they do create the contract which I can do myself.   But I need peace of mind while we are away overseas.  Do these prices seem high or is this industry standard?  

Also if any of you are managing a rental from overseas please comment and let me know your challenges or ideas.  

Thanks 

[Robert Seelig]

I only have one unit, but I lived in Thailand for 4 years and I managed the property myself. I am happy to talk with you. First off, I take care of my building top notch.  I also have an excellent relationship with my tenants. 

The first thing I do is I pay for extended warranties on all the appliances. I know people do not recommend extended warranties, but this may it so easy for my tenants.  My tenants would call the service provider and wait for the service personnel. 

The second thing I did was I provided to my tenants the name of my preferred plumber, electrician, hot water heater repair, roto-rooter type company and handyman. My tenants were directed to contact me first, yet if there was an emergency they could contact the repair companies.  I also have an excellent relationship with the repair companies and they they have authorization from me to spend $200, and everything beyond that they must get written authorization to proceed.

I also provide my tenants a monthly good will rent reduction. Every single month, I provide them to good will payment, and I label it as a good will payment.  They know that I am giving them the good will "rent reduction" in exchange for when stuff happens they will work with me to get things done. Paying them a "good will" payment every month is significantly less than paying for a property manager. I would typically provide a $75/month good will payment. 

[Scott M.]

How often do you visit your property now?  How often do you met with tenants or vendors in person?  If not at all, then you are already managing from afar and it doesn't matter if you live in the city or are 1/2 way around the world.  Just be sure that for whatever reasons you meet with vendors or tenants you have a way to do it remotely.  Like doing showings etc.

[Chris Levarek]

@Joel McGinley 10% is pretty standard for good property management in my experience. Can vary per market and asset class however. However, if it provides peace of mind and time, what is that worth?

I've done the 6-7% property management on C class assets personally, the savings isn't worth the pain in my opinion. Check reviews on the company, call multiple companies and the decision will be easier. 

It of course depends on your goals and what role you want to play in your investments which ultimately will influence if you manage all, some or none of the property management.

[Nathan Gesner]

A leasing fee of 1/2 or 1 month's rent is not unusual and 10% is pretty standard as well, but it may be unnecessary for high-end properties. Do your attendance tend to stay in place for multiple years, or do you have higher turnover? I'm sure if you shop around you can find someone cheaper or you may even find that you could just manage it yourself. Just keep in mind that cheaper does not always mean more money in your pocket. One mistake can cost you many months of lost rent

[Mason Hickman]

@Joel McGinley

I self-managed 2 of our long term rentals while living out of the country for 3 years. The standard maintenance calls were routed to a handyman and rent was all transferred via Zelle. During this time, I did two large projects outside of standard maintenance: new roof and replaced all the porches and decking with trex. The roof came out great but the decking was a mediocre job. It would have been good to have someone on site to provide a bit more quality control.

Overall, I wouldn’t shy away from doing it if you have good tenants in place.

Beware that if you plan to use the foreign earned income exclusion, you will need to watch how many days you spend in the US and may not be able to come back at your convenience if there is an issue. If you plan to use this tax strategy, I would keep that in mind and a property manager may make more sense.

[Ron Brady]

We manage 6 properties from overseas. 3 keys for us:

1. We initially set up everything to highly automate our rental—digital rent payments, all communications via text or email, digital leases, etc. Because of this, most of our residents actually do not know when we’re “out of town”.

2. We managed the properties and grew our portfolio while local over two years. Because of this, we got experience with good and not so good contractors, handymen, service providers, etc. Thus, when we went overseas we had a strong list of go to providers who we trusted and worked with. With your still growing portfolio this may be a challenge for you and thus may argue for your considering a property manager.

3. Our adult children live where our rentals are. We also used to be educators and we’ve stayed in touch with former students who are now adults. Because of this we have local eyes and ears when we need it. We pay them $25 if they need to respond to a service call to, for example, meet a plumber at a property.

Hope this helps and good luck. Self managing overseas is doable in 2021 if you set it all up right.

[Matthew Irish-Jones]

@Joel McGinley. I am a property manager in Buffalo NY. We offer discounts on class A properties with large rent rolls in high demand areas.

A class D property with 2 units renting for $600 each is a lot more work than a single family in a great area renting for $3500.

I would keep searching. In PM like the rest of RE it’s the administration and other low revenue items that suck up time and produce low returns like constant tenants calls, section 8 inspections, etc.

You may find someone willing to work with you and offer flat rates.

[Account Closed]

I manage a similar high rent property in California while living in Singapore. For an A class property it is very feasible. For low rent units I use a PM. You need a few things on the ground. And a particular type of tenant. PM if you want more info,

[Drew Sygit]

As several above have stated, if you have Class A properties, you can easily manage remotely if you embrace technology and solve the maintenance issue.

Regarding the fees you quote:

1) Placement Fee = 1 month of rent. Call some real estate agents and see if they will take less. Probably not.

2) Monthly Management Fee: 10% would be a bit high if rent is $3500.

Some things to keep in mind though, about your comments:

"Finding renters here is NOT difficult. They keep the first months rent (which is high in my area +3500.00 a month)"

and

"They then take 10% of the rent each month. They find and screen tenants (which is easy here in FL)"

Everything is easy until something goes wrong! What happens if the renter ends up using your property for growing/making drugs? Or turns it into a short-term rental with parties that seriously trash the place? These are just a few of the potential issues DIY landlords never worry about...until it happens.

Most PMC's screen way beter than DIY landlords:)

[Tchaka Owen]

@Joel McGinley - your post makes it sound like you're trying to find reasons not to hire a property manager. Several comments:

1. It is standard in most of Florida to charge the 1st month (I sometimes charge 10% of the lease) - that's a real estate thing and the PM finding you a renter likely has a real estate license. 

2. 10% is a standard PM fee. You can get a good PM for as low as 8%, once you find someone willing to go lower, be leery.

3. @Robert Seelig laid out what I would have advised, except that he did it better. My folks have been out of the country for over 4 decades and do use a PM. I'm 800+ miles from my home and I don't. IMO, technology has made it such that it's easier now to self-manage, however each place has its own factors that must be weighed. There's no one correct answer.

Good luck!

[Tim Robinson]

@Joel McGinley there are a lot of great responses here already but I will add my own two cents after managing five properties abroad for the past 3 years, 3 with property management, two "self-managed" with some assistance by friends and family. First, those fees you quoted are expensive in expensive markets but by no means outside of industry norms. This is why I chose to manage the two I did with friends and family, because they are in that price range as rentals. The other three were in more B-C neighborhoods which required a lot more day to day interaction which a PM was much more suited for.

Judging by what you are saying about your rental, my advice would be to enlist a friend or two that is still in the area and willing to act in an urgent/emergency situation that may arise in your property. Arm them with a list of pre-vetted contractors (plumber, electrician, general handyman, etc.) and set up all the automation that you possibly can (a lot can be done for free through platforms like apartments.com). Give that a shot for two or three months and if it works, you're good. If not, you can always interview some PM companies remotely and have them take over. I think with high-end rentals your day to day management is really not necessary (in my experience) and you can save significant money if you try to do it yourself. Best of luck!

[Joel McGinley]

Great input and wisdom from all of you.   Thanks so much!