If you live in an area of the country with an unaffordable real estate market, then investing in rental property in another state can be a reasonable alternative. However, before you head out to a fly-over state to invest in cheap rental properties, there are many things you need to take into consideration. Long distance rentals carry many different challenges than those purchased near where you live. So, before buying, take the time to carefully consider these important things:
You Must Always Tour Homes in Person
No matter what the circumstances, you should never, ever purchase property that you have not seen in person. If you find a rental home online that you are interested in, then you need to travel to that location and tour the home. Even if a house looks amazing in the photos, the home could be uninhabitable due to something you can't see in the pictures, such as mold, termites, or bed bug infestations.
You Will Need an Excellent Property Management Company to Manage Your Rental
When buying a house in another state to use as a rental, you must hire the best possible property management company in that local area. You cannot effectively manage your rental property from a distance without local people who can help you with each of these tasks:
- filling rental vacancies
- screening potential tenants
- collecting rent
- taking calls for emergency repairs
- repairing or replacing broken appliances
If your rental property is down the street from your primary residence, then you can shop for the best contractors and prices for new appliances for your rental. However, when you are many states away, then it greatly limits your ability to control who works on your property and where things like appliances are purchased. This is one area where a property management company will come in handy. Since they are professionals, the property managers will have a lot of industry contacts with businesses that can help you out.
You Must Personally Inspect Your Property at Least Once Each Year
Finally, even if you employ the best property management company in the country, you still need to protect your investment by personally inspecting your rental properties at least once each year. There will be extra costs associated with these visits to a remote rental, so it is important that you consider them when you make a buying decision. These extra costs can lower your rental profits and really cut into your bottom line.