Definition of "Absentee owner"

Linda  Liederbach real estate agent

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Linda Liederbachelite badge icon

Coldwell Banker Sea Coast Advantage

The definition of an absentee owner is a property owner who does not reside on the property. An absentee can be an individual or a corporation with legal ownership over a property regardless of whether they occupy it or manage it. And that would be every landlord, right? No, because a landlord is a property owner that is actively participating in the management process of the property.

In reality, when you hear someone use the term absentee owner, it refers more to the level of dedication that owner has towards its property. It is not only a matter of the owner being absent from actively living in the house, but also absent from actively managing the house.

Explaining Absentee Owners

To put it simply, the absentee owner meaning is used when describing an owner that benefits from rental properties without having to deal with the management of a rental property. Absentee owners in real estate hire third-party property management companies to ensure renters’ satisfaction. Real estate absentee owners look at properties from an investment perspective, gaining from the capital appreciation of the property and the rental income. They are most commonly present in corporate real estate, where companies rent office spaces to manage their own business. With commercial properties, the property owner does not have to worry about daily rental management and, instead, focus on new developments or investment properties.

An absentee owner can be a big corporation that owns shopping malls, apartment buildings, or corporate buildings, and an apartment owner who lives in a different state or country from where they own the property.

Absentee Owner of Residential Rental Properties

These absentee owners are relatively different from corporate absentee owners. It is a much more challenging position as an absentee owner of a residential rental property typically does not live in proximity to the property and can not manage it themselves. Because of that, they either hire a property manager or periodically check the property themselves.

Either of those instances can cause problems. If the property manager is not doing their job, ensuring renter occupation or does not keep track of potential damages to the property, the absentee owner will suffer losses. Similarly, if they manage it themselves by checking in periodically, they might encounter that the renter just left without notice, damaged the property, and again they can encounter loss.

These types of properties attract real estate investors as potential property leads. Those vacancy and income losses can motivate an absentee owner to sell regardless of the potential gross income coming from the property.

In the end, the term exists to distinguish owners that are hands-on with their assets and investments from the ones who let it in the hands of third-party companies or professionals who are put in charge of marketing, maintaining, and renting the property.

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