Why You Should Consider Long Distance Real Estate Investing
A rental property can preserve wealth, grow in value, and produce rental income all at the same time. Real estate investors love rental properties for this, but real estate investing isn't always affordable. Long distance real estate means you can break into more affordable markets and then use property managers to handle local matters so you don't have to be there. Our 33 Realty team is ready to answer the most important questions.
What Is Long Distance Real Estate Investing?
Long distance real estate investing is putting money into anything outside of your local real estate market you currently live in. If you get a rental property several hours or even several states away, then it's real estate investing from a distance. Be sure you get to know the operating expenses involved with a different market.
Using a local property manager will probably be necessary, but you might also be able to enter markets more affordable than the ones around you or enjoy a market with less competition. Looking farther can mean more opportunities overall.
What Are the Benefits of Long Distance Real Estate Investing?
Long distance real estate investing can be a great move for several reasons.
Access to More Prospective Markets than Your Local One
Your local market might have limited opportunities, or they might just have too high a bar to get into. If you're in an expensive market, such as San Francisco, then you might have to branch out to other markets just to have a chance to invest in real estate. It might also be that you've tapped out all your local leads and can't get more opportunities without looking around at other markets.
Not Rental Income Only Forever
Your long distance real estate might be a rental property with positive cash flow now, but it might not be a source of rental income forever. You might use your current rental property as a retirement home when the day comes that you cash in all your investments. In the meantime, your long distance real estate investing could possibly serve as a vacation spot for family and friends until your golden years arrive.
Long distance property management means that you can do real estate investing with long distance real estate. They would handle rental property matters for you. You would get more free time while you enjoy the risk diversification involved with this. It plays out in two different ways.
First, just getting involved in real estate lets you diversify your investments from bonds and stocks. Second, spreading out your real estate investing across multiple geographic regions means you diversify your real estate investing in itself.
When Should You Consider Long Distance Real Estate Investing?
There are many specific circumstances that might dictate looking into managing property from a distance.
- High Crime: People always want to feel safe at home, as owners or renters.
- Bad Schools: This is always a concern for parents or couples planning on having kids.
- More Bang for Your Buck: If you live in the Northeast or West Coast, then you might get more for your money if you buy homes in the South or Midwest.
- Better Communities: If there aren't investment properties in good neighborhoods where you live, then looking outside your local market means you might be able to do so.
- Retirement: You might be able to buy an investment property somewhere that you would like to retire. The home can actually pay for itself long before you ever need it as a place to live.
Useful Tips on Long Distance Real Estate Investing
Investing in long distance real estate is a different kind of real estate investing, so you need the right tips for your rental property.
#1 Research the Market
One thing about long distance real estate is that you need to thoroughly research any market you look into. You might know many things about your local market off of the top of your head just because you live there, but a rental property in another city or state can be a total unknown to you. Get to know all you can online from afar.
#2 Study Local Laws and Taxes
Housing laws change from state to state and even from one city to the next. Property taxes can also be very variable. Even the smallest changes can wind up being a very big deal over time. Hopefully, you can find markets friendly to property owners and with lower taxes than you face locally.
#3 Partner with Local Experts
It might feel like real estate investing is something you do alone, but remote real estate investing works best when you work with local experts. A property manager is almost a must, but you might also need landscapers, general contractors, and home inspectors among many other professionals.
#4 See the Property in Person
You might not be able to actually visit every piece of long distance real estate that you consider, but it's worth doing. Online listings will always usually make a property look good, but that's because they're trying to sell it. Only a visit in person can help you get a feel for the place in terms of environment, traffic, people, and the surrounding community.
#5 Then Visit Your Long Distance Property Once a Year
Real estate investing appeals to many because it might involve a lot of work, but you should still visit your rental property at least once each year. Make sure the property is still in good condition. Just make sure you announce your visit well in advance.
#6 Partner with a Property Management Company
Partnering up with a property management company can be a smart move for any long distance real estate that you become an owner of. A rental property will need someone local to handle immediate concerns and emergencies for anyone renting your long distance real estate. Managing a property from a distance isn't as easy as it looks, and it carries risks.
What about Commercial Real Estate Investing?
Investing in commercial real estate often means doing investments with non-residential properties. These might be warehouses, retail spaces, and office buildings. The financing here is often very different from getting a home mortgage. Given that, before you start, you should consult a real estate brokerage firm about your qualifications.
Long distance real estate appeals to many real estate investors for the opportunities it presents. Real estate investing from afar can mean property managers are necessary, whether you have one rental property or multiple rental properties. If you need help, then feel free to contact us at 33 Realty!