Long distance RTO's

Antonio

New Forum Member
REIN Member
Feb 17, 2013
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#1
Hello,
I'm looking for input from anybody who has experience with long distance Rent to owns. I live just north of Toronto (Richmond Hill) and I'm looking at an RTO in Sault St Marie. If there was ever a default or some other problem, would getting a property manager in that area be the best option..?

Would appreciate any input
Tony
 

ThomasBeyer

Senior Forum Member
REIN Member
#2
You need in-depth local property expertise AND you need in-depth RTO expertise on the legal / setup side AND you need tenant-buyer selection expertise AND you need property management expertise while holding.

Don't do it unless you have all FOUR - either by yourself or with reliable operating partners !
 

Sherilynn

Senior Forum Member
REIN Member
Oct 22, 2007
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Edmonton
www.qdhomequest.com
#3
Agreed. Specifically, the property management expertise in RTO deals more-so with tenant and investment management, meaning one must groom the tenant to be a buyer and also manage the RTO deal through its completion.

We have done several long-distance RTO's, and thankfully every one of them closed successfully. However, we have had a few local RTO's fail (mostly due to layoffs).

When an RTO fails, it is a challenge even if the tenant leaves the property in pristine condition. Since RTO's are short-term holds, there may not be enough of a profit margin to accommodate several months of carrying costs plus realtors' commissions.

With all of our failed RTO's to date, we have found another RTO client. This involves an entirely different level of property management because it isn't a standard showing. The person showing the property must be able to think on his or her feet and start to tailor the deal to meet the client's needs. Basically one must start closing the deal during the showing. Since an RTO is a huge buying decision, it doesn't work well to have someone with a regular rental showing mentality or skill set doing the showing.

Yes, there are some RTO companies who simply put a lock box on the property and tell people to grab a highlight sheet and show themselves around, but I don't see that as being very effective, especially in a buyers' market.

Personally, I think this is one task one must be careful to whom one delegates.
 

Antonio

New Forum Member
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Feb 17, 2013
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#4
So Im assuming with the long distance RTO's you have done, you had in place a Realtor or Management company in that area to look after it incase things went sideways....