Absentee Landlord: a person that owns a property and rents it out while residing a considerable distance away from the property. The opposite of an absentee landlord is called an owner-occupied landlord.
Absentee Landlord Details
Absentee landlords do not visit their properties for several months and sometimes even years. Landlord absenteeism is common among owners of properties in different countries or states, most notably vacation homes.
A tenant is a person that pays rent for a property to use or occupy the property. Generally, there are preferences among prospective tenants, some of which may like to rent properties with an absentee landlord. Absentee landlords with multiple properties can quickly contact property management agencies that will act as caretakers for the property and reduce the risks involved.
Example of Absentee Landlord
Another definition of an absentee landlord is the owner of a property that rents the property out to tenants but does not put in an effort to maintain the property, besides what is required by law. These type of absentee landlords are challenging to get ahold of and usually only care about the income of the property, not about the tenants or the state of their property.
In agricultural terms, an absentee landlord is one that owns a property but lives far from the property and provides minimal input in the daily operation, maintenance, and production activities.
The most common type of absentee landlord is when an owner of a home rents it out for vacations. These vacation homes are usually far away from the owner and are left empty if the owner is not there, or if it has not been rented out. A lot of absentee landlords contact property management companies close to the home to employe someone to act as the landlord in their absence.
Types of Absentee Landlord Advantages and Disadvantages
Being an absentee landlord has advantages, which include:
- Tax deductions: In several countries, individuals are allowed to deduct travel expenses that are business-related from their taxes. This eases the burden of expensive trips to property locations.
- Multiple Income Streams: Having a diverse rental portfolio helps to create a soft fall for sluggish rental markets. For example, during the winter months, markets for vacation homes in popular summer destinations may be slow and rental payments from guest homes in winter vacation destinations will offset the low rent influx.
- Employment Creation: Most absentee landlords employ property managers or caretakers to manage daily operations at the property. Some agencies build their business model around rendering such services.
Many disadvantages of being an absentee landlord can be mitigated by hiring a property manager. However, in the event of not hiring a manager, not being available could result in issues such as:
- Decrepitude: It is difficult for absentee landlords to keep up with the maintenance obligations of a property. As a result, relatively inexpensive, small problems can grow into cost-intensive ones. Some of these include plumbing faults, garbage build-up, pest infestation, and leaks. Other regular maintenance activities such as trimming of flowers, repairs, and repainting of fences, cutting of grasses, and raking of leaves may also not be done.
- Tenant Issues: Misuse of property, defaulting on rental payments, illegal activities, and damage of property may not be checked, resulting in potential incurred losses or state sanctions.
- Inability to vote in local elections: It is a significant challenge having a business in an area in which one cannot affect the establishment or implementation of laws.
- Illegal Occupants and Burglaries: For rentals that are unoccupied for a large portion of the year (seasonal or vacation homes), these properties are prone to encroachment by burglars individuals that could live within the property and cause damages resulting in expensive repairs.