This is the eighth tip in a 10-part series on purchasing residential rental properties based on my experience.
8. Stay close to home.
In my experience, absentee landlords tend to find out about and resolve problems less quickly, which in turn can make them bigger, more expensive problems. For this and other reasons, municipalities are none too fond of absentee landlords, which can also lead to bigger, more expensive problems, like fines and even citations. It may sound lovely to own a rental house in the Outer Banks of North Carolina when you live in Michigan, but you may be in for a nasty surprise when you next visit. Plus, you’re not there to help batten down the hatches when the next storm rolls in.
Twenty minutes or less is an ideal distance; it allows you to appear involved and available to your tenants and local officials, be a visible part of the community, and respond rapidly when help is needed.
One unfortunate landlord I know attempted to hold down a busy job in Manhattan and found a startup company while managing several properties over an hour away in New Jersey. He invested a chunk of money to fix up his properties, and everything seemed fine until a minor plumbing problem occurred in one of the houses. A cleanout cap popped off the waste line sewer pipe. It was an easy fix involving a five dollar part, but this landlord was late to respond. He didn’t have much luck with the local plumbers he reached out to, and more time passed. One day a plumber finally called back after visiting the house and angrily exclaimed that he patently refused to work under those conditions.
What conditions, you ask? In a house of eight tenants, raw sewage had been pouring into the basement for over two months. The muck was knee-deep, the stench was abominable, and yet the tenants, college students, had never said a word. The house was in foreclosure within the year.
One of my own tenants phoned me one day several years ago to let me know that water was gushing into the backyard from beneath the outdoor spigot and she was unable to stop it. In twenty minutes, I was there to address the issue, shutting off the entire pipe until it could be fixed. Proximity saved me a flooded yard and basement as well as a hefty water bill.
If you cannot be local to your investment property, it is important that you find someone you can trust who is able to serve as primary contact for emergency maintenance needs. This will become part of your ongoing cost of ownership. Even then, you need to ensure that lines of communication are such that problems are not allowed to fester before they are addressed.