You don’t have to wait until retirement to own a property overseas.
Sure, it is a good retirement strategy, but as an entrepreneur or a working professional, there are several benefits to owning and letting a building in another country.
Besides the additional earnings, you will be diversifying your income. At times when your home currency drops, the income from a foreign country can act as a buffer. Another reason is that you have a place to stay for free when you travel. Similarly, if you choose to relocate after retirement, you always have a home waiting for you.
However, managing a property from a different country is not without its issues. In fact, this is one of the risks why people hesitate to become landlords abroad. The pain of managing your tenants across borders can be a handful.
Things to know first
A rental property in a different country requires two management levels;
- Rental management
- Property management
While these services can be managed by the same person or agency, it may also need two different resources.
Rental and property management
The rental manager is responsible for making sure your property is always occupied. They oversee the marketing of vacancies to prospective tenants, as well as screen each tenant you let into the property. They will also be responsible for check ins and check-outs.
Conversely, a property manager is responsible for the condition of the property, making sure it is in habitable condition for prospective tenants. They will also manage things like utility bills; power, water, taxes and any maintenance that needs to be carried out on the premises.
Most rental management companies offer both services, and they will normally charge separately and differently for both. It is wise to avoid agencies that lump these services together in an all-inclusive fee.
If you hire an agency for this service, it means you wouldn’t be tasked with finding tenants yourself, or keeping tab on association rental management fees. Additionally, the responsibility of maintaining the property will not be on you. However, you will pay for it.
Choosing the right management service
The success of your overseas property rental business will depend a lot on the efficiency of your rental manager. It is therefore important that you choose carefully.
Begin by making inquiries in the area. Meet with other property owners near your property, ask them about their own management process. Are they satisfied? Can they give you some recommendations?
Alternatively, they you could do a quick search online to identify companies in the area that come highly recommended. You can either use Google, people’s testimonials or customer reports. If you use Google, the top 3 – 5 results should be a good place to start. Ensure you search in the language of your prospective renters. This will help you get more suitable results.
The next step is to interview the agencies you have narrowed down. Ask each of them for the full details of their services. Also inquire about the market to gauge their knowledge. You want to engage a company that is effective and comfortable to work with.
Study the proposal presented by each company to make sure they will perform the responsibilities you want. Remember, you will not be available most of the time. A capable team will save you unnecessary heartache.
- Collecting initial rental deposit
- Collecting monthly rent
- Ensuring that utility bills are paid early
- Inventory taking
- Check-ins and check-outs
When you select a service, work out the details of their fees. Do verify all the financial aspects before appending your signature on any document.
The best time to find a rental manager is right before you purchase the property. They can be a great source for recommending property that suits your rental preferences. A rental manager who is a native of the area can help you find reliable tradesmen to complete finishing if need be.
To make it easier, we have outlined 8 things a rental and property management team can do for you.
1. Revenue and expenditures statement
Your wealth is extremely important. If there is anything you must pay complete attention to, it is the revenues and expenditures statement. Work with a rental manager who has some experience with accounting. Most well-managed property agencies have an in-house accountant.
Having an up-to-date inventory is also critical to the success of your property investment. Your rental management should keep a copy (both hard and soft) of all receipts and invoices, replaced items and taxes and bills paid.
2. Payments processing methods
Study the rental managers payment procession methods. How does he collect it from tenants? Which system will be used to remit the money to you? Verify all fees that will be charged for transferring money, and at what currency rates they will be changed if it is not pounds.
3. Ongoing help
The rental manager must always be available and responsive to tenants in case of an on-site emergency. The manager will also provide his contact information to each tenant.
4. Meet and greet
It is important for every tenant to feel welcome when they arrive. It is the role of the rental manager to help ease the new tenant into the building without stress. They may also organise social gatherings to help tenants bond together.
5. Regular payment of bills
The easiest way to settle the local bills, including phone, cable and internet services is through direct debit. If this is a problem, then your rental manager should sort the local bills for you. Ensure the send the statements regularly to you. The same goes for your taxes.
The rental manager should perform periodic checks to identify areas that require maintenance around your property. The property manager usually handles this service, but it is important to get reports and keep financial records of every repair or renovation.
If you don’t have a maid service, a rental manager can oversee this function. Many agencies have their in-house cleaners ready to clean on specified days.
Now you have an idea of foreign property management, are you ready to take the next step? It could be an added boost to your income.