Property ManagementDec 16, 2022

7 Reasons Property Management Is Important for Foreign Investors

Here is why property management is important for nonresident investors. When it comes to real estate investing, buying a property is just the first step. The real challenge comes afterward.

Seasoned investors know that the key to achieving steady cash flow and positive ROI lies in property management. And this part of the investment journey is even more important for foreign investors.

The above applies to all the most common real estate investment models. Whether you’re in the short-term rental business or are playing the long game, you won’t be able to manage your property by yourself. 

That is particularly true for the popular Airbnb business model. Although this model is an incredible way to generate good ROI, it requires even more engagement on your end than other models (e.g., handling online bookings, communicating with new tenants regularly, and organizing regular cleaning and maintenance). That’s why delegating property will be the key to success.

Partnering with a reliable property manager or property management agency is the best way to reduce the amount of work you’ll need to do, regardless of your business model. Although doing this will cost you a fraction of your profit, it will save you a lot of time while helping you build passive income.

But before we get into the most compelling reasons you should consider partnering with a property manager as a nonresident investor, let’s first clear up what property management entails. 

What Is Property Management and Why is it so Important for Nonresident Investors?

Property management entails hiring a third-party contractor or agency to help manage residential, commercial, or industrial real estate properties. Property managers help real estate investors streamline daily tasks like finding tenants, filling out paperwork, addressing customer complaints, handling property maintenance, and much more.

Having a property management agency is particularly beneficial to foreign investors who often live half the world away and cannot be physically present to monitor and manage all their properties. The best way to manage a property overseas is through a reliable property management agency.

property manager showing foreign investors in us real estate the condition of the house they bought and what needs to be fixed for new tenants

What Does a Property Manager Do?

Property managers help real estate investors handle many things. However, their list of duties is never set in stone. Depending on the manager or agency you partner with, you can negotiate and include different activities. 

Here’s a short list of the most common tasks property managers can handle:

  • Finding and screening tenants;
  • Handling and filling tenant application forms;
  • Doing background checks on prospective tenants;
  • Exchanging blacklists with other agencies and property managers to help avoid unreliable tenants;
  • Hiring contractors for property maintenance;
  • Doing regular, small-scale property inspections;
  • Taking care of the property insurance;
  • Handling and managing rent payments;

How much you’ll pay your property manager or agency depends on how many activities you’ll need them to cover. On average, their cut will be 10%–20% of your profits.

7 Reasons You Should Hire a Property Manager (or Agency) as a Nonresident Investor

As a nonresident investor, getting help in the form of a property manager or agency is almost essential to creating a self-sustainable and profitable real estate business. Here are seven reasons hiring a property manager as a foreign investor will pay off.

1. Property Management Is Important for Foreign Investors Because It is The Backbone of Your Real Estate Business

If your real estate business were a car, property management would be its engine. It is the single most important thing to achieving steady cash flow and high ROI. Mishandling your properties can cost you a fortune (or even completely break down your real estate business).

That’s why you must do it right. And like in most things in life, experience is crucial to success. As an aspiring nonresident investor, that’s the only thing you lack. That’s why hiring a professional property manager or agency with years of experience can be invaluable to success.

On top of that, delegating property management to a third party also gives you a lot of freedom. With a professional property manager, you can invest and create a profitable real estate business from anywhere in the world.

Yes, a property manager will take a piece of your pie, but the investment is worth it. After all, you’re investing in US real estate to build a self-sustainable business and generate passive income. And you won’t achieve that without putting property management on autopilot.

a property manager holding keys in his hand

2. Property Managers Help You Find the Right Tenants

Finding tenants in the US is generally quite easy due to high demand. However, it only gets more time-consuming as you expand your investment portfolio. On top of that, identifying the most reliable tenants is the tricky part if you have little experience. And since even a single bad tenant can cost you tons of money, it’s something you want to avoid.

Since nonresident investors live in foreign countries, finding suitable candidates becomes even harder. That’s why professional property managers can relieve you of most of the workload.

But besides looking for tenants and handling applications, property managers also do in-depth candidate screening. They will check everything you need to know about potential customers, including their credit card scores, incomes, and much more. Most property managers and agencies even have extensive blacklists of unreliable tenants, which further helps minimize risks.

Even if you already have hands-on experience with finding tenants and are a good judge of character, no amount of experience will trump a seasoned property manager or agency. 

3. They Help Manage Your Property Remotely

One of the biggest challenges nonresident investors face is managing their properties from another country. And it becomes even more complicated if there’s a huge time zone difference.

Organizing property inspection, scheduling maintenance, collecting rent, and many other day-to-day tasks are much more difficult (or even impossible) to do remotely. That’s why it’s always more beneficial to have someone close by that can handle these tasks in your stead.

Some foreign investors delegate these duties to friends, family, or coworkers who live there (if they have that luxury). But if you’re investing in a state where you have no connections, a property manager or agency can handle these tasks for you. That way, you always have someone available to address any emergencies and handle tasks that need to be done in person.

a flooring guy to set up new floor for their nonresident investor home owner

4. You Can Improve Tenant Retention With Minimal Investment

Tenants are your customers. And like in any business, you need to keep your customers happy for them to return. The same principle applies to real estate investing.

The happier your tenants are, the more likely they’ll stay longer. And the longer they stay, the easier it will be for you to profit.

The reason is simple — finding (or replacing) tenants costs time and money. So the ideal scenario for any foreign investor is to keep tenants for as long as possible.

The way you do that is by handling any objections and solving issues quickly. But since foreign investors live far away, that might prove difficult.

That’s why having a property manager or agency readily available can help nourish existing customers and improve tenant retention. And the more long-term tenants you have, the easier it will be to maintain a steady cash flow.

5. Property Management is Important Because it Will Save you a Lot on Travel Expenses

This point should be a no-brainer, but it’s still worth mentioning. If you handle property management yourself as a foreign investor, you’ll have to travel a lot. After all, there are some activities that you’ll have to deal with in person.

But if you work with a property manager or agency, they can handle all these tasks for you. Even though your property management partners will take a cut off your ROI, you’d spend plenty of time and money on traveling otherwise.

A property manager takes care of all maintenance and repair tasks in your properties

6. A Property Manager Helps Keep Your Property Safe and Maintained

Ensuring a property is safe for tenants and regularly maintained is a landlord’s duty in most parts of the US. That entails conducting regular property inspections, fixing faulty installations, and doing specific chores like cleaning snow in winter and mowing the lawn.

So to fulfill these requirements, you’ll need to hire and manage various contractors. Although you can handle these tasks for a few houses, the more properties you buy, the harder it will be to keep up.

That’s where a property manager or agency can take off your workload. Depending on the contract you make with your partner or agency, it can include covering some or all of these duties for you. That way, you can put most of your property management duties on autopilot and focus your time and efforts where it matters the most — investing.

7. They Will Be Available 24/7 (So You Don’t Have To)

One of the biggest problems of being a nonresident investor is that you often live in an entirely different time zone than your tenants. That makes it difficult to address urgent problems promptly. Let’s not even mention that the more houses you buy, the more calls you’re bound to get on average.

Some of the core duties of a property manager or agency are to be available 24/7 to client inquiries and handle emergencies for you. Although delegating these duties is a game-changer for any real estate investor, it is especially valuable for foreigners.

So Should You Hire a Property Manager as a Foreign Real Estate Investor?

If you are planning to build a self-sustainable real estate business as a foreigner, you should definitely delegate property management to a third party. That will allow you to focus your time and money on things that matter the most — ROI optimization and expanding your portfolio.

However, finding the right property management partner is no easy task, especially as a foreigner. Many shady parties out there can end up costing much more than they should. That’s why it’s always best to only work with agencies and individuals through reliable references.

At NRI, we help nonresident investors buy real estate in the US and offer them guidance at every step of the process. And that includes property management. 

We have many carefully vetted property management partners in several US states, including Texas, Wisconsin, and Florida, that we can connect you with. But even if your investing goals lie elsewhere in the US, our agency’s network of connections can help you find and vet property management partners quickly. 

Why not hop on a short discovery call to learn how our team can help you
find a reliable property management partner?

Founder & CEO
Luka Malkovich is a serial entrepreneur with years of experience in international real estate investing. As the CEO of Nonresident Investor, Luka’s mission is to educate foreign nationals about the US real estate market and help them secure funding and buy property in America. That’s why he’s using his expertise to turn the NRI blog into a knowledge hub for anyone interested in learning about US real estate. This article was written by a professional content writer in conjunction with Luka Malkovich. Luka has thoroughly reviewed this article and has given his final approval before publishing.

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