How
can I manage my real estate investments from overseas?
Should I let my
family or a friend manage my real estate investments?
Two answers,
three words: You can't. Don't.
Unless you
want a tenant calling you at 2AM to tell you the toilet
is clogged, don't try to manage your property from
overseas.
Unless you
really want to stress your relationships and perhaps
permanently damage them, don't have family or friends
manage your property for you.
Hire a
Professional Property Manager
Hire a
professional manager. It's what they do. They know all
the legal ins and outs, have reliable repair staff, and
can even evict someone if it needs to be done. Of
course, you can save 10-11% of the gross rents by having
family or friends manage it, but why would they want
YOUR headaches? And will they be quite as diligent as a
rental agent who wants to get the property rented
quickly so they can collect their commission?
By the way,
management contracts have clauses built into them so
that the agent must ask your permission before spending
certain amounts of money. You set the limit.
Property
Management can be Dangerous
How will you
feel if your father is beaten up when he goes to collect
the rent? It happens.
How about
the lawsuit he causes when he doesn't follow the legal
process for evicting someone who hasn't paid your rent
for the last three months? That happens too.
How about
when he forgets to renew the fire insurance a month
before the house burns to the ground? Yep, that happens
too.
Let the pros
handle it! They have errors and omissions insurance to
handle all these problems. They know how to do it
right. It's what they do.
Is it all
good?
No. Have I
ever had to fire a property manager? Yes. Twice in
about 16 years - but that is three managers for three
different properties across most of that time. And, it
is not so difficult to fire them - most contracts have a
thirty day notice built into them. I did it from
overseas both times via fax and/or email. Not a
problem.
How will you
feel if you need to "fire" your father, or best friend?
Special
note: I had a major fire in one of my rental properties
a few years ago. Damage well in excess of US$20,000.
My property manager handled it all. It would have been
a major task for a family member or friend to obtain
bids, hire contractors, supervise their work - and
coordinate all the payments with the insurance company.
You would need to quit your job and go home to take care
of your investment.
BTW, if you
buy good landlord insurance (and do!), it covers the
lost rent during the time the building is not habitable
- you need not lose any income in such a circumstance.
If you
invest, do it right. Having family or friends manage
your investments is not an adult way of managing your
responsibilities.
Caveat:
These are only my opinions, I am not a financial
consultant.
