The term absentee is an umbrella term for a variety of circumstances. While you can use this term for anyone not currently using a property as their residence, you would use it more to describe a landlord.
In addition to landlords, you can use "absentee" to describe a property owner uninvolved in managing their property. They could be uninvolved for several reasons:
- geographical distance
- size of the real estate portfolio
- property management style
Typically, absentee ownership can happen both on the corporate front and the individual front. When a Corporate Real Estate Investment firm acquires large swathes of property—either commercial or residential—they often choose to contract out the day-to-day management to private Property Management Companies. These Property Management companies take on all duties related to maintaining these properties.
Individual absentee owners may simply own one property, and have moved from that property to another. The property they leave behind does not need to be occupied for the owner to be considered absentee. However, if they rent out the residence they own to a tenant, the term absentee is used to describe the owner's relationship to that property.
Example of Absentee
An example of an absentee would be a large corporation that bought a large swath of land to place a mini-mall. The real estate investment firm, located in the southwestern portion of the United States, purchased this land in upstate New York. The company was unaware that the local community had hoped a resident would purchase the land to place a park on that piece of property. Because of the corporate backing, the firm could pay a larger sum for the property and therefore move forward with commercial property.
The local community was in outrage about the lack of engagement the company had with the area's residents. But the real estate firm saw the demographics of the area, and knew that there was a need for low price point grocery and supplies. While the residents never got a park, they did continue to funnel money into the corporation's property over the next decade.
This example demonstrates the complexity of being an absentee. The corporation did not hold in high esteem the community's desires, but did create jobs and filled a need in the community. The corporation also placed its financial goals over the community's desire, but the community was more than willing to patronize the mini-mall. The community didn't get what they wanted and couldn't connect to the absentee corporation, but they still ended up using what the corporation built.
Significance of Absentee
There are many benefits to owning real estate as an absentee owner, the foremost being financial. The larger a real estate portfolio, the greater your financial gains are. However, some believe that absentee ownership is a negative term, as it often applies to commercial property owners. Because corporate ownership places the highest priority on financial gains, many citizens do not want absentee ownership in their communities. Owners who have no connection to a local community often do not care to benefit or grow that community in a manner that locals agree with. It is because of this that there is often some contention to the concept.