Whether you’re purchasing overseas property for investment, retirement, a vacation home, or a mixed use of the aforementioned, there’s one factor you must consider: management. How you manage your foreign property will determine whether the ownership will end up comforting or costing you.
The benefits to owning an overseas home are multiple – it diversifies your investment portfolio and assets in another currency, reigns in high long-term yields if managed wisely, all the while allowing you to have a travel and cultural experience on your days off.
To ensure you reap the benefits of your place abroad and prevent the possibility of drowning in the unanticipated pitfalls, we list the top 4 steps to foolproof your foreign property management action plan.
Hire the right property manager
This cost is one that’ll save you more in the long-run. Hiring a local property manager to take care of everything while you’re miles or oceans away saves you time and stress, so you can focus all your attention on your smorgasbord of more immediate demands. It won’t be sustainable (or enjoyable) if you end up choking all of your spare-time with troublesome overseas matters that you could’ve avoided, had you hired someone to check-off the overseas housekeeping items for you.
Property managers will do everything from finding and checking in with your tenants before, after, and between rentals, to setting up and replacing furnishings, being an emergency support/assistance for your tenants, to taking care of your inspections, repairs, maintenance, and even evictions. They are the most convenient and competent way to go, as they will not only understand the local real estate market better than you (who’s across the country), but will also be a one-stop-shop/person for your need of multiple services in order to cultivate and maintain high yields from your foreign property investment.
The trick is to investigate which rental property manager is the best fit for your buck. Make sure to research and ask upfront all the questions you care about, so you get the most accurate price to types of services offered to quality of services ratio. You’re going to want to hire one that will also be the most likely to bring in repeat business in terms of quality tenants. Building relationships, loyalty, and trust will make all the overseas logistics that much easier, and hassle-free.
Set a Fair Rental Price
This is an example of when hiring a property manager, who’s an expert in the local real estate market, pays off. You want to find the sweet spot in tenancy prices so that you receive enough rental requests, attract the type of tenants you want, and rule out the ones you don’t. Plus, the property manager – once you’ve hired the right one for you – can pick the right tenants for you. Believe it or not, this can be the difference between saving or spending large amounts of money. When the wrong tenants end up under your roof abroad, what was supposed to be the luxury that gives back can quickly become a nightmare that makes you want to tear out your hair.
Think of it: cleaning, evictions, repairs, remodeling – things can get real messy after just one rental if the wrong people get involved. Once you’ve developed a relationship with trustworthy tenants, you can even ask them to interview and screen other prospective tenants if they are open and happy to take on that task. Or the more likely outcome – they’ll refer your rental property to their friends, which keeps your overseas home in circulation with people you can count on.
Get Landlord Insurance
In case of situations you or your property manager can’t control (i.e. floods, storms, accidents, vandalism, etc.), landlord insurance can protect you. Make sure to find the insurance company or agent who provides the type of coverage you’re looking for. A landlord’s insurance policy can include building, contents, and property coverage, as well as premises liability. Premises liability coverage is especially important, as a tenant who injures themself during your stay could sue you for negligence, but being covered can protect you from such accusations and your legal expenses can be paid off for you as well. Be sure to give this research its due diligence.
Pick a preferred payment method
Between your rental property manager, to your tenants, to your insurance, mortgage payment if applicable, and other services such as cleaning, there are a lot of payments involved. The best way to avoid payment confusion and avoid getting overwhelmed is to organize the payment process from the get-go. It’s easy to lose track of where you stand with all your invoices, property taxes, and so forth, so arrange which payments your property manager will be responsible for, and which ones you will be. This can mean off-loading much of the bill and invoice collecting to your manager if that is permitted and agreed upon.
Are you making wire transfer payments towards your mortgage or paying for repairs and other property expenses? Find a fast and cost-effective alternative to wire transfer when you use REMITR – the fastest way to send money internationally. You get live exchange rates that tell you exactly how many $ you need to pay to meet your mortgage payments in Europe, Asia, South America and any other country. Your payments are sent off within one business day which ensures you do not miss your mortgage due dates.
These 4 steps are foundational and crucial to turning your foreign rental property into a smart real estate investment. And if you take anything away from this article, we want it to be that prioritizing both convenience and competence will end up being the most cost-effective and efficient way to save money and yield high returns in the long-run while having a better experience with your overseas property and everyone involved. Take care of all the logistics right, and you’ll get to enjoy all of the luxuries you wanted for yourself!