We wanted to sell our Florida house before we move to Panama. It would give us a cleaner exit, and also a little cash in our pockets to help with moving and settling-in expenses.
Unfortunately, the Central Florida economy has intervened. While we’re among the lucky ones who aren’t underwater with our mortgage, our house is now worth what we paid for it 10 years ago, with values still falling.
It no longer makes sense for us to try to sell. Instead, we’re looking for tenants.
We won’t get out clean, and we won’t have that cash cushion we anticipated. It’s a messier exit, for us at least.
Fortunately, while the real estate market is still in free fall, the rental market is tightening up.
However, renting out a home when you’re in another country has some pitfalls. You can’t exactly run over to fix a leaky pipe, or make sure the tenants are keeping the lawn mowed.
Unless you have family or close friends in the area who are willing to manage your property, there are two ways to cope.
Hire a Professional Property Manager
Many real estate agents also act as rental property managers, and you can also find companies that specialize in property management. For a fee, they’ll
- Find tenants and run the necessary credit and background checks
- Handle lease agreements on your behalf
- Collect rent and pay mortgage and other monthly recurring bills on your behalf
- Handle repairs and maintenance (for additional fees)
- Other services you and they agree on
If there’s enough leeway between the rent you can charge and your mortgage payments, hiring professional property management is the option that will give you the most peace of mind.
I was talking recently with a woman who lives mostly in Mexico, but still owns a home in the US. She suggested a different route, one she and her husband have used successfully for several years.
They purchase a Home Warranty which covers the appliances, water heater, heating and cooling units. They meet their tenants personally, to make sure they are people who will take good care of the property. They have strict penalties for late rent payment, so people tend to pay on time.
If an appliance needs repair, the tenants call the home warranty company. There’s a required fee, which the tenant pays, and the home warranty covers the remaining cost.
Of course, the owners still need to make their own mortgage and other payments, which they do primarily through online banking.
The home warranty costs a bit less than a property manager.
Renting on the Other End
Of course, without selling the house, we won’t be able to buy a home in our new country. But that’s okay — we weren’t planning to anyway. At least not right away.
Experts advise that you rent for six months to a year before buying abroad, and I think that’s good advice. We plan to rent a furnished apartment or house for three-six months when we arrive, while we look for an area we’d really like to live.
Then we’ll rent there for at least a year before making a purchase. That way we’re not stuck.
Do you have a different solution for handling a long-distance rental? Share it in the comments below!
photo by Pistols Drawn on flickr