Investing in a market that you’re familiar with may be safe, but often, you need to break free from what’s comfortable to be able to make a profit. This is because your market may not be the best in terms of potential, rental demand, and more. And although long-distance real estate investing can be a challenge, it can also be more lucrative. Besides, it’s no longer impossible to run a rental property from afar – a property management company, for instance, can see to its day-to-day needs for you.
If this is your first time investing in a long-term real estate investment, know that it’s riskier. However, that doesn’t mean it’s not worth it. With due diligence, you’ll be able to profit from your long-distance property in no time. In this post, we’ve put together a few tips to help you manage your long-distance rental property from anywhere in the world.
What is a long-distance real estate investment?
If you live in a given market but you own a rental property in another market, you’d be considered as a long-distance real estate investor. In other words, long-distance real estate investing is when you purchase a rental property that’s a state, city, or county away. For instance, if you live in Palm Beach County, but you own an investment property in Miami-Dade County that’s being run by a property management agent, you’d be engaged in long-distance real estate investing.
What are the benefits of long-distance real estate investing?
The main reason why investors choose long-distance real estate investing as an investment strategy is that they know that they won’t be able to make money in their own markets. They are aware that if they were to invest, they wouldn’t be able to have a reasonable return on investment (ROI). They’re sure that it wouldn’t make economic sense to run a rental in the local market because it would be impossible to find affordable real estate deals in the first place.
Since it wouldn’t make sense to move to a more attractive market either, they’ve decided to run their rentals remotely. That way, they’ll be able to benefit from the best of both worlds – run a rental in a profitable market without having to give up the comforts of home.
Other pros of long-distance real estate investing include:
- Purchase affordable properties. Real estate in states such as California, New York, and Texas are expensive. If you can’t afford to purchase a property in your market, it would make more sense to look for properties in places where prices (and taxes) tend to be substantially lower.
- Invest in a vacation home. You don’t have to use your long-distance investment as a rental – you can turn it into a vacation home whenever you want. For instance, you can rent it out as a short-term rental in the summer, but use it as a vacation home over the winter.
- Buy in better neighborhoods. Can’t afford to own a property in an area with a low crime rate, top-rated schools, and more? You may be able to purchase a comparable property for a fraction of the price in the Southern and Midwestern states.
- Future retirement home. If you invest in a rental property for retirement you can earn rental income from your property for now, and turn it into your retirement home when the time comes – that is if you intend to move when you retire.
Tips on long-distance real estate investing
If you’re planning on purchasing a long-distance property, remember that you won’t be able to visit it every day to oversee repairs, maintenance, and more. With that in mind, we’ve compiled five tips on long-distance property management:
#1 Research the market
You may be able to purchase a property from any market, but be sure to put in the work. If you buy a property blind, you likely won’t be able to profit from it. You need to know whether or not a given market will align with your investment goals – in other words, if it can attract tenants. What are the schools like? What’s the crime rate? What is the price-to-rent (PTR) ratio? What does the rental demand look like?
To do this, partner with a property management firm that can help you find information on rental demand, appreciation, and more. Your goal is to figure out if a given market generates a good ROI.
#2 Partner with reputable contractors
You won’t be able to deal with repairs in person, so you need to partner up with contractors that you can count on. Get their contact details so that you can call them at a moment’s notice in case of emergencies. Alternatively, you can also enlist the services of a local property management firm that can attend to your tenant’s concerns.
#3 Use property management software
Find a way to streamline your rental-related tasks such as collecting rent, screening tenants, and renewing leases. Use a property management app or platform to consolidate all of the information related to your rentals, such as receipts, inspection reports, and more. If you’ve partnered with a South Florida property management company, ask if they have a tenant portal that they can provide. That way, your renters can conveniently contact you even when you’re a county away.
#4 Visit the property once a year
Even if you’ve invested in an app or platform, you should still plan a yearly visit to your rental property. Not only will this allow you to check the property, but it’ll also provide you with the opportunity to meet your tenants. By doing this, they’ll experience your genuine care about their experience. Don’t forget to inform your tenants that you’ll be visiting, as it would be illegal to enter the property without your tenant’s permission.
#5 Partner with a property management company
If you’re unfamiliar with the market, you’re likely unfamiliar with the laws, as well. It would be unwise to invest in a market where you don’t know what you can and can’t do, so make sure to partner with a property management company that does. While the laws are widely available online, it would still be best to have a well-versed individual by your side.
Need help managing your long-distance rental property?
In general, remote property management can be profitable… but only if you know what you’re doing! With Luxury Property Care, you can make sure that your real estate investment is expertly managed even when it’s thousands of miles away from where you live. Our team of on-site real estate professionals will screen tenants, collect rent, coordinate repairs, renew contracts, and more so that you don’t have to.