We’ve talked about our real estate investment strategy and why we rent our home while traveling in the past, and here we are finally addressing how we manage those properties while on an adventure.
When not traveling, we manage our own rental properties. We place the tenants, take the calls, and make repairs as needed.
Now that we’re on our RV trip around America, we need someone near the properties who can help us manage the properties, provide service to tenants, and solve problems that will inevitably arise.
Property Management for Travelers
We don’t have a traditional property manager.
They are too expensive for us, typically taking upfront payment equal to first month’s rent and up to 10% of gross monthly rent.
Instead, we have a relationship with a reliable handyman. We pay him to provide landlord support and value where we really need it while traveling.
The handyman has three main responsibilities in our relationship:
1. He is on-call if tenants cannot reach us in an emergency. We continue to be the primary point of contact for our tenants. However, if our phone goes straight to voicemail or we don’t respond immediately, our tenants are instructed to call our handyman directly. We trust him to provide good service, and we empower him to take action in an emergency.
2. He is our trusted set of eyes on the ground if an issue arises, inspecting any problems reported by tenants and making recommendations for repair.
3. He will complete any work required, including coordinating and overseeing skilled trades, at a predetermined rate.
How much do we pay for this service?
We pay the handyman a $200 per month retainer.
He is paid this money whether or not he has to lift a finger.
In exchange for this money, he is willing to be on-call for our tenants in an emergency and take appropriate action to mitigate the issues.
In non-emergencies, as directed by me, he will inspect issues reported and make recommendations.
If he has to complete any work or coordinate a skilled trade, we pay him $30 per hour for his time plus materials at cost.
We also pay for any skilled trades (i.e. HVAC technicians, plumbers) that have to be hired.
Note that in this arrangement, the handyman only deals with tenant calls in an emergency. In all other situations, we interact with the tenants, and when an inspection or repair is needed, we rely on the handyman to execute at our direction, not the tenant’s.
Also note, that for my own peace of mind, before we left on our adventure, I completed a few repairs and a bunch of preventative maintenance at the houses. I’d rather knock this out on my own than pay the handyman to do it while I travel. I recommend others do the same.
What about screening tenants and leasing?
We don’t rely on our handyman for these services.
We screen and place our own tenants, and when we’re planning on an adventure, we try to align leases so that we have some assurance that tenants will be in place while we travel.
In our case, tenants in three of four houses renewed on a one or two year lease the month that we departed, and the other renewed a couple months prior. This gives us some peace of mind that we will have tenants in place for our year of travel.
What about rent collection?
We have no expectations for the handyman to handle any rent payments or collection issues.
We are fortunate to rent to respectable folks who pay their bills, so we don’t really have rent collection issues.
We did have the issue of paper checks though. We don’t have a mailbox right now, so that makes it challenging to receive and cash checks.
For the time being, we’re relying on Venmo, the mobile payment application.
So far so good.
What if a renter breaks the lease? What if the HVAC system dies? What if the tenants burn the house down? What if the tenants don’t pay rent?
Real estate investments have risk, and traveling full-time increases some of the risks for real estate investment.
However, we believe we have most of the typical landlord and investment property issues covered, and we’re willing to take on the risk of an outlier incident.
If something dramatic happens, then perhaps we’ll have a real problem on our hands, but we’ll cross that bridge when we get there.
And, of course, I’ll tell you all about it on the blog.
Guess what! It happened. Only a couple weeks after this blog post, this property management model was put to the test.
Any suggestions for improving the model?
I would love to hear from other real estate investors or homeowners about any risks you see or recommendations for improvement you have about this property management model that we’ve adopted.
Let me know in the comments.
David Hawkins says
I think it is a good idea to have a handyman at the ready. You want to make sure your tenants feel like they are being taken care of with maintenance. If a handyman is available for your properties then it helps keeps everything in good condition. Thanks for the info!
Mark Kelley says
Thanks for the comment, David.