5 Biggest Property Management Problems for Foreign Investors

5 Problems Foreigners Face When Managing Properties Remotely (And How to Solve Them)

Jan 23, 2023

Becoming a real estate investor in the US is hard and is not for the faint of heart. But what’s even more challenging is investing in US real estate as a foreigner. In this article, you will learn how to solve the most common property management problems that foreign investors face.

Although foreigners can buy properties in the US online without many issues, the problems of being a nonresident become most apparent when you need to handle property management.

Finding tenants, closing contracts, monitoring your properties, and renovating your houses is difficult when you’re not physically present. However, don’t be discouraged — just because it’s harder doesn’t mean it’s impossible.

In this article, we will cover the five biggest problems nonresident investors face when managing properties in the US and how to solve them.

property manager checking progress

5 Most Common Property Management Problems for Foreigners

These are the five most notable problems with handling property management as a foreign investor (especially if you live overseas).

1. You’re Not Physically Present

Being a nonresident investor most often means you’ll be living abroad. Sometimes, that can even be half the world away. 

Although buying a house in the US online is relatively easy, finding tenants, maintaining your property, and handling legal paperwork is. That’s why most foreign investors need help with property management to ensure everything goes smoothly. 

However, if you hire a property manager or agency to help circumvent this problem, you will lose a small portion of your profit (due to property management fees). Still, that is a much better option than having to be available 24/7 and travel for every emergency.

2. Lack of Knowledge About US Laws and Regulations

Another hurdle foreign investors face is being unfamiliar with US laws and regulations. That particularly pertains to the rules that define the relationships between landlords and tenants.

These laws vary from state to state, so you may come across an entirely different set of rules and obligations depending on where you want to invest. Some states are more landlord-friendly than others, which can make a lot of difference in ROI.

For instance, here are a few examples of the beneficial regulations landlord-friendly states have:

  • Landlords have an easier time evicting tenants who skip paying rent;
  • You can rent your property for as much as you like (some states have hard caps based on property size);
  • You can charge as much as you want for a security deposit.

Besides helping you pick the best places to invest, knowing the US legal system will make forming contracts with tenants much more manageable. That’s why an up-and-coming investor will need to do a lot of learning or turn to professionals who specialize in working with nonresidents for advice.

foreign investors reviewing their expenses

3. Higher Property Management Expenses 

As a foreign investor, you’ll most likely need a property management partner to help you manage your properties remotely. Although there are many reliable property management agencies out there, there are some bad apples too. 

Few nonresidents know that many agencies use clever tricks to overcharge you for certain services. For instance, they often do that when hiring contractors in your stead. However, awareness of this behavior is the first step to preventing it. 

Here are a few things you should always do to minimize property management costs:

  • Partner only with reliable agencies or individuals (preferably through references);
  • Always ask them to save and send you an image of receipts for any intervention or purchase they do;
  • Evaluate their performance regularly, even if they’re a long-time partner.

As long as you oversee your partners thoroughly and follow this advice, you should minimize property management expenses and avoid getting scammed.

4. You’ll Often Need to Travel

Regardless of how well you handle property management, all nonresident investors need to travel a lot. And depending on where you’re from, the travel expenses can pile up quickly.

In an ideal scenario, you will delegate most of the work to a property manager, so you won’t need to be on-site as often. However, some situations will require you to be physically present (e.g., extensive property renovations). 

But even if everything’s running smoothly without your intervention, it’s a good idea to visit your property in person once every few years (or more often). 

Although traveling is inevitable, and these trips will cost you time and money, they can be an excellent learning opportunity. You can use your time in America to meet new people and familiarize yourself with your target customers’ ways of life. 

So despite being a financial burden, if you approach these trips with the right mindset, you can easily turn them into an invaluable source of experience.

zoom call with a property management company

5. It’s Harder to Communicate Due to Time Zone Differences

Perhaps one of the most limiting challenges most nonresident investors face is the time zone difference.

If you live in a country close to the state you’re investing in, you’re in luck. But if you live across the ocean, you’ll find yourself in quite a problem.

The key to maintaining steady cash flow is retaining tenants. And the way you make them stay as long as possible is by keeping them happy and addressing any problems quickly. If you live half the world away, communicating with them and dealing with their issues will be hard. That is especially true in cases of emergencies. 

The easiest way to deal with this problem is to assign someone else (a local) as a contact in case of emergencies. But if you don’t have family or friends in the local area, your best bet is to partner with a property manager or agency. 

Should These Property Management Problems Stop You From Investing?

You aren’t the only one facing these challenges — even local investors come across many of these issues. Just because you have a few more issues to deal with for being a foreigner doesn’t mean you should get discouraged. This is why property management is important for nonresident investors.

Facing and overcoming these challenges is normal. After all, it’s all part of your investing journey. And how you deal with these problems is what separates average from successful investors.

Although there is no surefire way to eliminate them entirely, you can easily mitigate most of them simply by delegating property management to a third party (someone local).

There are many advantages to working with a professional property manager or agency, but the most obvious ones are that they’ll help you solve all of the problems we talked about. A reliable property management partner can help you with everything from finding and screening tenants to ROI optimization. 

Here at NRI, we have worked with dozens of property managers and agencies to identify the best, so you don’t have to. We connected dozens of investors with top-class property management partners across many states, including Wisconsin, Florida, and Texas. 

If you need help finding and choosing the right property manager for your investing goals, we’d be glad to help you. Why not jump on a short discovery call with our CEO to learn how our connections can help you find the best property management partner for your business?

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