Landlords living overseas who own property in other territories are frequently presented with a conundrum – how exactly do they keep tabs on the tenancy of their various properties? After all, they’re far removed, often in different time zones and unable to do things like scheduling inspections, meeting personally with new tenants, etc.
The solution is for these individuals to hire a property management company to do the job for them. These locally-sourced companies provide huge net benefits for overseas landlords who cannot be present to conduct important property management routines.
THE VALUE PROPOSITION
The simple fact is that overseas landlords have more challenges managing their properties due to their physical distance. This level of detachment can actually affect earnings potential, especially if the property depreciates due to damage or other factors related to tenancy.
As a result, many overseas landlords may opt to sell their properties, rather than deal with the inconvenience. In doing so, they lose on actualizing long-term earning potential, particularly if the currency conversion is not in their favor. Offsetting that issue involves hiring a property management company to do the job for them. The property management company acts as liaisons to collect rent, screen tenants, and keep tabs on the health and durability of the property. If something breaks, they’re on hand to bring in professionals to fix it. If tenants are in violation of the contract, property management companies can take the necessary steps to remove them.
Every property is a long-term investment with a lot of earning potential. Selling too early and disposing of these property assets from one’s portfolio is not a wise strategy, particularly if the property investor wants to maintain a steady and healthy revenue stream well into retirement age.
THE RISKS OF GOING SOLO
Some overseas landlords may attempt to take care of things themselves, or trust in their tenants, but that opens up an entirely new set of risks that should be avoided. For instance, the simple process of repairing a property can be daunting. Contractors may overcharge, cut corners, or overlook things that would normally be dealt with by a property owner on the scene.
Similarly, tenants can skip out on rent for months at a time, or may involve by-law inspectors if repairs are not addressed. It’s difficult enough for many landlords to deal with non-paying tenants as it is, let alone trying to manage these issues from overseas.
A property management company knows the ins and outs of tenancy, and how to deal with non-paying or bad tenants. They have access to the right legal channels, and an understanding of how to mitigate the problem before it spirals out of control. Without a property management team at their side, overseas landlords could unwittingly drag a problem out for months, or even years at a time, incurring costs whilst losing huge amounts of revenue.
The pressure may escalate to such a degree that overseas landlords simply decide to cut their losses and sell their properties, but they also may face further loss. If the property has been irrevocably damaged by a bad tenant, overseas landlords could see their property valuation decrease, and less bidders show interest to buy a property that does not show well. Suddenly, a property with a high valuation could take too many knocks due to the issues plaguing it, making it that much harder to achieve a fair asking price.
There are ancillary factors to consider as well, including finding good tenants to take over when other tenants vacate. A remote long distance landlord cannot meet prospective tenants, cannot conduct outgoing and incoming suite inspections, and cannot identify repairs that may need attention before a new tenant moves in.
It’s far better for overseas landlords to put their properties in the hands of an established and reputable property management company. The costs are negligible compared to the overall peace of mind they bring to a landlord, whether domestic or foreign. The less a landlord has to do to keep an eye on a property, the more time they have to invest in other things.
If you are an existing or prospective overseas landlord with property to rent in Canada, please contact us at RentCore, and learn how we can take care of all the daily tasks of property management, so you don’t have to.