Last year we decided to downsize and simplify, and basically start over. We moved from Birmingham, AL to Clearwater, FL. I love it. I would have done it sooner, but most of my income comes from 10 rental properties I own in Birmingham.
I underestimated the downside of being an absentee landlord. In the 15 months since we moved I have had two evictions and one tenant passed away (in the unit). I had already decided before we moved that as I experienced turnover I would move the vacant unit to a property management company. I knew there would be a cost of doing so (10% of monthly rent plus a tenant placement fee of 1/2 month's rent). What I did not anticipate was the difficulty the management company is having getting my units occupied. I have turned over two properties to them so far. There have been considerable costs to upgrading these properties to the management company's standards. In addition, because the two properties I have turned over are in fringe areas, most of the tenant pool do not meet the qualifications to rent from the management company. I turned over the first unit in April, and it was just rented in October. I turned the second unit over in June and it is still vacant. To rent the first unit, I had to reduce the rent by $100. After accounting for the 10% management fee, I will be bringing in $165/month LESS on this one unit than I had been earning.
I am tempted to sell everything and be done with it. I am never moving back to Alabama so I can't see the situation improving. But selling these properties would take a lot of time, and I am not sure I can match their return with a comparable investment. Frankly, the cap rate on these lower income properties is ridiculously good, even at the lower rent the management company is getting... but only if they can keep the units occupied 85% of the time (I use a 15% vacancy rate in my cash flow projections based on past experience, but I don't know if that is going to hold with this new company handling things).
What should I do? There's quality of life issues - I've had to travel to Birmingham a number of times, though I hope that would decrease as the management company takes over. If I sell, I don't know where I would find a comparable return on my investment.