What is an absentee landlord?

An absentee landlord is a person, corporation, or governmental entity that owns and leases real estate but is not physically present on or near the property. Absentee landlords rent out commercial or residential properties that are treated as an investment.

Main Takeaways

  • An absentee landlord owns and leases property but is not physically present on or near the property.
  • The term “absentee landlord” can have a negative connotation. Often because people perceive you to be solely interested in real estate for your benefit.
  • Absentee landlords can use traveling expenses when visiting their property as tax deductions.
  • There are several drawbacks of not monitoring the property daily.

Understanding absentee owners.

When used in the residential real estate industry, the word “absentee landlord” often carries a negative connotation; as an absentee landlord can fail to conduct necessary upkeep and maintenance issues the house may face.

Unlike flippers who look to generate a quick return on a property by buying, fixing, and selling it, absentee landlords look to generate their money by rental income. Absentee owners are frequently more common in the commercial real estate market.

Often, the property owner will delegate the property’s day-to-day operations to a property management company.

 

Pros and Cons of an Absentee Landlord

Pro:

When owners move to another state or area, they are often forced to choose between selling their home and renting it out, effectively being an absentee landlord. By renting out the house, the owner retains ownership, thereby enabling the residence to appreciate value.

Another advantage to becoming an absentee landlord is the associated tax deductions. When traveling to your property to view its condition, you can write that off on your taxes.

Cons:

For the property owner, becoming an absentee landlord may be risky. Neglect of the property can cause the house to deteriorate over time, costing you expensive repairs. Without proper supervision, squatting conditions may also occur. If you have renters, you may find evictions quite tricky.

Property Management.

If you are looking to be an absentee landlord, it may be worth paying for property management services. Property managers are responsible for leasing the house, maintaining, and ensuring that the property’s worth does not depreciate over time.

Related Articles