Every experienced real estate investor knows that the most important step in the real estate investing process is choosing the right rental property. Thus, real estate investors are in constant search for the best investment property, near and far. While some investors would not leave the 20-mile radius, others are ready to go for out-of-state real estate investing as long as they are able to find a good, profitable, safe investment opportunity there. This brings us to the question: Are homes for sale near me a good real estate investment option or not? Well, as with most real estate questions, this one has no right or wrong answer. Sometimes homes for sale near me could be the best investment idea out there, while other times they might be a terrible investment decision. Let’s have a look at why homes for sale near me are a good real estate investing idea and how to decide whether to go for this option or not.
Why Homes for Sale Near Me Could Be a Good Real Estate Investment
You know the local housing market
Maybe the most important reason which makes homes for sale near me a potentially good investment idea is the fact that I as a real estate investor am already aware of the local real estate market, just from living there. We all know the property prices, the types of properties, and the types of residents in our own neighborhood. Thus, buying, managing, and renting out a property nearby is an easier option. We don’t have to start our housing market research from scratch.
You will be the first one to see them
As soon as a property pops out for sale in your vicinity, you will be among the first people to show the “For Sale” sign. This will give you a strong advantage over other real estate investors and homebuyers because you can schedule a visit to the property for sale right away.
It is easy and cheap to visit the property before buying
While out-of-state real estate investing can be a great idea, it definitely has its disadvantages. When looking at homes for sale near me as potential investment properties, I can go visit them easily and cheaply, as many times as I find convenient before I am sure that I am making the right investment decision. This will save me lots of time and money (from gas).
You will be able to visit your investment property often
It is recommended to have regular checkups on your rental property once you start renting it out. Actually, it’s best to set the intervals at which you want to visit your investment property in the landlord-tenant agreement in order to avoid any problems with the tenant. Homes for sale near me actually make ideal rental properties because such visits would be very convenient and cheap. Although having an investment property 2,000 miles away could be a very profitable real estate investment, checking up on your property is extremely difficult and expensive.
There is no need for professional property management
Homes for sale near me would eventually make investment properties near me, which means that I would not need professional property management – as long as I have some handymen skills, of course. Professional property management can be very expensive, especially for a beginner real estate investor, so it is always a good idea to have the option to opt out of it, which is virtually impossible if your rental property is located far away from you.
Related: Professional Property Management: Yes or No? Why or Why Not?
How to Know When Homes for Sale Near Me Are a Good Real Estate Investment
Although homes for sale near me have some serious advantages over far-away properties, this doesn’t mean that any close by real estate property is a good real estate investment. I as a real estate investor would still need to go through a certain process to decide whether the neighboring house would make money for me or not. Here is how to go about it.
Conduct real estate market analysis
Regardless of how aware you are of the local housing market because of living there, you are never an expert on it unless you have already invested in it. Thus, the first step in deciding whether homes for sale near me are a good investment decision is to perform real estate market analysis to see whether the entire local housing market is a good idea at the moment. That is to say, when buying nearby investment properties, you should go through the same steps as when buying out-of-stataea properties. Make sure that the housing market is not approaching a bubble. Assure that you can find good tenants throughout the year. Decide whether traditional or Airbnb is the better rental strategy in your particular location.
Related: How Is Real Estate Market Analysis Different from Stock Market Analysis?
Perform investment property analysis
After deciding that my local real estate market is a good option for investing at the moment, I would need to do investment property analysis of each of the homes for sale near me which I have liked. This is to be conducted in exactly the same way in which I would proceed with a potential investment property located 1,000 miles away. The investment property analysis – best to be done with the help of a rental property calculator like Mashvisor’s – is to include calculations of the expenses related to the buying, repairing, owning, and managing of the investment property as well as the rental income to be expected from it. Focus on such profitability measures as cash flow, cap rate, and cash on cash return to decide whether a nearby property is a good real estate investment decision. Last but not least, explore whether the traditional or the Airbnb rental strategy will yield higher return on investment.
Related: How to Do Investment Property Analysis
Homes for sale near me could be one of the best real estate investments to come across in my life. However, the proximity of the location and your basic knowledge of the local real estate market should not lure you into making a not-well-thought-through investment decision. You should still go through the same process of analyzing a housing market and a potential rental property before deciding to buy an investment property close to your home.
For the best investment properties near your home or far away from it, visit Mashvisor’s property search engine and investment property calculator.