Investing in real estate in another state can be a good option, as it can help you buy rental properties in a more affordable areas, especially if you live in an expensive one. You can also find areas that have lower property taxes and lower insurance premiums, which can help you maximize on your investments. As you consider buying a rental property out-of-state, here are two tips to help you be successful with the process.
Put Together a Trusted Team
Before you begin investing in an out-of-state area, you need to build a team of professionals to include a real estate agent and an accountant. The real estate agent will have knowledge about the area you are investing in and know which areas are good for rental investments and which ones aren't. To help you find a realtor, t can be helpful to visit websites advertising properties for sale in your search area to find out which realtors do a good majority of business there.
Visit the area and interview a few prospective realtors to find out which ones have the most knowledge with buying and selling rental properties. It can be best if you can find a realtor who owns several rental properties and can help you analyze potential rental property investments for cash flow. It is important to look at a property's expenses and potential rental, so you and your realtor can make sure you buy a property that will be profitable. Then, your realtor will help you make an offer and negotiate the terms of the purchase price.
Next, look for and hire an accountant to help you keep track of all your tax deductions and other expenses that you can write off. A knowledgeable accountant will be able to help you maximize your deductions and find any tax breaks to lower your taxable income on your rental property. You should look at owning a rental property as a business, and having a good accountant to help you handle the accounting side of the business.
Hire a Property Manager
One of the first steps you should take after you buy a rental property is to hire a property manager, especially when you are an out-of-state tenant. Your property manager will be a local presence to take care of any problems and issues with your tenant and your property.
If your tenant were to find out you lived in another state and not locally and there was no local property manager to handle their rental, their accountability to take care of the property and be a good tenant can decrease. The tenant will know no one will be likely to check on the property, handle late rent payments, and may not be ready to complete an eviction, if necessary. A local property manager can check on your rental property at any time for you and be in direct contact with your tenant.
Your property manager will also know which local services, contractors, and repair companies are the best to use for any rental property needs. This includes, plumbers, pest control, and a local attorney to handle evictions and other legal processes. If your tenant has a utility emergency over a weekend, the property manager will handle everything for you so you don't have to.
Your local property manager can recommend optimal rent rates for the area, as they will have a great deal of knowledge for the area. They will also handle searching for and screening potential new tenants and complete a thorough background check to find good tenants and advertise and show the property to any potential renters.
The cost to hire a property manager can vary by area, but on average it is between four and ten percent of the property's monthly gross income. If you own a rental property with multiple units, the fee is usually on the lower end. Also expect to pay your property manager a flat rate fee when they find a new tenant for the property, which can be anywhere from a few hundred dollars to an amount equal to one month's rent.
For more information or assistance, contact top property management companies.Share