The Ins and Outs of Long-Distance Real Estate Investment

It’s one thing to manage a rental property when it’s nearby, but oftentimes it can be a whole other process entirely when the real estate is in a city far from your homebase. However, it’s fair to say that most investors, as well as second-home buyers, find this reality out the hard way, given that it can be difficult for them to market his/her rental property, maintain it and do all the other things necessary to have a successful rental regime.

That’s not to say you can’t still “get ‘er done” going the do-it-yourself route. You can with the right tools. But if your goal is to do just that long-distance, most professional property owners/managers will tell you that they can bring a lot more to the table when they keep their properties local – as in the ability to give a property their full time and attention, along with marketing, screening, maintenance, record-keeping, periodic inspections and so on.

Still, that doesn’t mean investors shouldn’t buy out-of-town or out-of-state properties; they just have to remember to be economical and willing to take various preventative measures.

So why be a long-distance landlord? Inherently, there are pros and cons with long-distance real estate investing. Owners have the freedom, for instance, to invest in more affordable areas – by restricting themselves to only the area in which they live. Or, there might be a wise investment available, if you’re thinking long-term and, perhaps, find a property that would constitute a place where you’d plan to retire. And, as always, there will be certain tax advantages to buying out of state, depending on the area.

So how can you then avoid some of the typical pitfalls with buying out-of-town or out-of-state properties? Well, first and foremost, finding good tenants is key – a fact that is bound to make managing the property easier. In that sense, if you’re managing the property long-distance, less monthly rent, from world-class renters, could be a wise move. And then you’ll want to get a solid grasp on the condition of the property you’re purchasing, along with an understanding of the local market. Buying a fixer-upper in an unfamiliar market, for example, could pose problems if you don’t have a wide network of repairmen/contractors who can provide the help needed. It’s sometimes challenging to self-manage your place when you live hundreds of miles away, which is why, really whether buying locally or out of state, it’s critical to weigh all the necessary facts before investing in property elsewhere.

Brent Wells