Starting a rental property business in some overpriced cities is not the easiest thing to do. At its best, it’s extremely draining. At its worst, it is downright impossible. What should a potential real estate investor do in this case? Give up? Heck no! What real estate investors could do is read this blog on how to buy rental property out of state and seriously plan to invest out of their area!
Location is absolutely everything when investing in real estate. Everything from property listing prices to local real estate legislation is impacted by a property’s location. Median property prices are a perfect example of the influence of location. Some cities are just way too expensive to invest in, for both beginning investors and more experienced ones. The solution? Investing in out-of-state real estate!
‘Out of state’ does not necessarily mean a different state. Investing in real estate in a different city within the state can be just as profitable. For instance, if you are looking for affordable and lucrative properties in California, why invest in San Francisco when you can invest in the much cheaper, yet still profitable, Visalia, CA?
Out-of-state real estate investing can be an excellent investment. However, it presents its unique share of challenges. To overcome these potential issues, and maximize on the investment, here’s how to buy rental property out of state.
Picking a Rental Market
The three biggest issues when wanting to know how to buy rental property out of state are finding the right market, searching for a property, and handling its management. The first challenge trickles down to the other two, making it very significant.
The obvious con of searching for a rental market for a real estate investor is unfamiliarity. There’s really only one remedy for this issue: learning about the rental market. Here are some vital pieces of information to know about a rental market:
Laws
Local real estate legislation can have a tremendous impact when investing in real estate. This is especially true with Airbnb rentals. Airbnb laws tend to center on where and how long a property can be used. Local real estate legislation for Airbnb may also require the house investor to have certain permits in order to operate the property. For both Airbnb and traditional investors, it helps to invest in an area that has a local real estate legislation that is landlord-friendly when wanting to know how to buy rental property.
Taxes
Taxes are obviously part of the law, but they deserve their own category when discussing how to buy rental property out of state. Property taxes are a recurring expense when investing in real estate, and some areas tax heavier for it than others. Airbnb laws can also differ on tax requirements. Airbnb hosts may have to pay a hotel tax, a transient tax, or more.
Trends
Basic economic and population trends can help dictate if investing in real estate in a certain area is a good idea. If the population is growing, the number of potential tenants is increasing. This is also true when the local economy is performing well.
Finding the Right Property
Once you have settled for a rental market, the next step on how to buy rental property out of state is to look for a property. Once again, unfamiliarity serves as your enemy in this situation. No need to despair, however, as there are resourceful ways to find property listings out of state.
Advertisements
Advertisements may not act as the best primary source of property listings, but they surely can help! Sometimes, you can find a real investment gem hidden in a local newspaper or magazine. It’s always a good idea to keep your eyes open.
Real Estate Agent
Using a real estate agent to find property listings in an unfamiliar area is always a great idea. Not only will the agent help the house investor find rental properties, but the agent will also help the investor become familiar with the area, making the entire process of how to buy rental property out of state much easier. A real estate agent can also be the building block of a new real estate investment network, which will help the real estate investor succeed in the out-of-state investment.
Mashvisor!
Your best bet on how to buy rental property, both in or out of state, is to use Mashvisor. Property listings for the best traditional and Airbnb properties are available. Mashvisor also serves as a tool for real estate market analysis, helping you confirm that your selected market is suitable for your investment goals.
Unfamiliarity is the prime obstacle of out-of-state real estate investing. Mashvisor eliminates this problem, making finding the perfect investment for a real estate investor much easier! Data including ROI metrics, property listings prices, trends, and the optimal rental strategy for each property are readily available and constantly updated. Using Mashvisor will make investors feel like they are investing in their hometown.
Conducting Management
Like the heart that keeps the body running, rental property management keeps a rental property operating. While it is vital for the house investor to know how to buy rental property out of state, it is just as important to know how to manage these out-of-state properties.
Management tends to come in two forms when investing in real estate in an unfamiliar area: professional property management and self-management.
Professional Property Management
Professional property management is the go-to management type for out-of-state properties. It’s easy to see why, as it is difficult for a real estate investor to frequently travel to the location of the investment property to resolve problems or check up on maintenance. The main issue with professional property management is that it can be expensive, but in this scenario, it will definitely be worth it. This is especially true if the property generates great positive cash flow.
Self-Management
Self-management is not as doable for out-of-state properties. However, if the real estate investor has a single or few properties, and can easily visit the property, self-management could be a viable management option.
For more on how to buy rental property out of state, sign up with Mashvisor today!