Absentee landlords. It’s a term that applies when a landlord isn’t around very often. This may be because the landlord lives a significant distance from the rental. Some people never intended to be landlords but found themselves needing to move or managing a property they inherited. Some wanted a rental investment but are reluctant to manage the property.
Unfortunately, absentee landlords are the most likely to experience:
Late and skipped rent payments;
Costs of eviction;
Property damage; and,
Fines for bylaw violations.
There are four major reasons why these landlords are more at risk:
Absentee landlords ask too much of their good tenants.
An absentee landlord is asking the tenant to do the landlord’s job. As a result, the tenant must sacrifice their own time — and in some cases their own money — to manage the property and make repairs. Too often, those tenants put off needed repairs until property damage occurs.
Eventually, even the best tenants will become disgruntled, and terminate the lease.
High turnover increases a landlord’s out-of-pocket costs. And, each time a landlord must find a new tenant, there’s a risk that it will be a bad one.
Lax tenant screening exposes landlords to income loss.
Professional tenants — the ones who cause problems on purpose — look for absentee landlords because these victims are easy prey. Bad tenants take advantage of the landlord’s time limitations or inexperience to scam their way out of tenant background checks and move in with little or no scrutiny.
If the landlord is scammed, no rent will be forthcoming, but it could take months for an eviction. Only then will the landlord discover the full extent of any property damage.
The landlord is ignoring rule-breaking tenants.
The absence of property management only reinforces bad behaviour because tenants soon learn there will be no consequences.
Missed rent, neglect of the property, and annoying the neighbours will become a way of life.
Routine property inspections are crucial to profitability.
Absentee landlords often skip property inspections. Without routine inspections, landlords cannot minimize property damage or curb criminal activity.
Left unchecked, the damage can be catastrophic, costing tens of thousands of dollars and taking the property out of service for months.
There simply is no way around the need to diligently screen tenants and actively manage a rental property. Landlords who fall into the “absentee” category have two choices:
Commit the time needed to be a professional landlord. Focus on quality of time spent over quantity, and create the appearance of active management; or,
Bring in a professional property manager. Some landlords balk at the thought of sharing a percentage of profits with a property manager, but absentee landlords with bad tenants routinely lose 100% — or more — of their anticipated profits for the year.
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.