What is an Absentee Owner?
An Absentee Owner is a person or a group who owns a property but does not live there or manage the day-to-day operation of the property. This term is used to differentiate between property owners who are actively involved in their investment and those who are not.
Understanding of Absentee Owner
Absentee owners or precisely corporate absentee owners are in property investment for the financial gains and rents. Most of the time corporate absentee owners own commercial properties and use property management companies to keep their renters satisfied. This hands-off model enables the absentee owners to concentrate on locating or creating new investment properties rather than being dragged down in day-to-day property maintenance.
They tend to view real estate solely as an invested capital and may contract out all duties to a service provider, such as a property management firm. Absentee ownership can refer to a property investor who owns one house in a state other than their own, or it can refer to a company that owns shop centers and apartments across the country.
Absentee ownership allows a property developer to seek the greatest properties available without being limited to their immediate location or region. Furthermore, once a property maintenance system is in place, a variety of properties can typically be built much faster than one that is actively maintained.
On the other hand, absentee owners heavily rely on their property managers and that connection can seriously affect an investment. A toxic management business may lose an absentee owner's good renters and rental income well before the owner recognizes what's happening.
Practical Example
Natalie owns property in Australia. She is a businesswoman who has a really busy schedule in her day-to-day life. As she doesn't have much free time, she decided to be an absentee owner of that property in Australia. Now, she doesn't have to manage the day-to-day operation of that property but can receive the rental income.
In Sentences
- The term absentee owner is widely used for those people who have one or more properties or assets but don't want to maintain them.