Investing outside your immediate area can pose several benefits. For example, you can find up-and-coming places to purchase rental properties in. Additionally, diversifying your rental portfolio can help you identify profitable markets. However, if you want to buy rental properties from afar, you need to be a long-distance landlord. While there are several benefits, there are a few things to note before becoming a long-distance landlord. First, let’s go over some tips and mistakes for long-distance landlords.
What is a Long-Distance Landlord?
A long-distance landlord is precisely what it sounds like–a landlord who lives outside their investment area. Being a long-distance landlord appeals to some investors who want to explore new areas and increase cash flow.
Benefits of Buying Property Outside the Immediate Area
Some rental investors try to invest in properties close enough to check up on the unit or meet with tenants quickly. That said, this method works great for landlords who live in a profitable real estate market. However, buying property outside the area could be beneficial for investors who live in markets with high prices and low returns. Here are some of the main benefits of purchasing property outside your local perimeter.
- Invest in Up-and-Coming Areas
- Find More Affordable Properties
- Diversify Your Rental Portfolio
Invest in Up-and-Coming Areas
When you want to invest in areas outside your immediate area, it gives you the opportunity to find up-and-coming areas with profitable rental markets. When you look for up-and-coming areas, you can choose a rental market that caters to your desired result. So whether you’re looking for increased cash flow or higher projected appreciation, you can find markets that best fit your goals.
Find More Affordable Properties
When you look for new areas to invest in, you can have some control over your rental returns. After all, you can look for more affordable places to invest in and find great property deals. That said, finding smaller secondary markets with cheaper rental properties can create opportunities for greater returns.
Diversify Your Rental Portfolio
Outsourcing your rental business by buying properties outside your area can diversify your portfolio. Additionally, you can find a market that matches your investment strategy. After all, location is everything when buying a rental property. So, if you’re looking to purchase single-family houses, look for family-friendly suburban neighborhoods.
What Does a Good Opportunity Area Look Like?
Buying rental properties outside your local area is all about finding a location that offers opportunity. But, what does a good opportunity area look like? Here are some factors to look for to determine a good property location.
- Neighborhood- The number one thing you’ll want to look at before buying a property is the neighborhood. Depending on what type of neighborhood you’re aiming for, you can determine the type of tenants you’ll attract and the average vacancy rates.
- Property Taxes- Property taxes are different depending on where you invest. High property taxes aren’t always bad if you have long-term tenants. However, avoid unappealing locations with high property taxes.
- Crime Rate- Nobody wants to live in a property surrounded by criminal activity. It’s crucial to analyze the crime rate and find properties with low crime rates.
- Schools- If you aim to attract families, buying a rental property near local schools can bring in more tenants. Additionally, if you buy a rental near a local university, you can expect to have increased demand during the school year.
- Job Market- Many people move to new locations for job opportunities. You can attract more tenants by buying properties where the job market is hot.
Tips For Buying Sight-Unseen
Without seeing it firsthand, buying a rental property can be stressful for long-distance landlords. However, the process is the same as seeing it in person, except it’s all done online. Nevertheless, it can be hard to get an accurate image of the property and potential tenants without seeing everything in person.
If you’re a long-distance landlord and want to make an offer on a property without seeing it in person, here are some tips.
- Look Closely at Property Photos and Details
- Begin the Loan Process Early
- Hire Trustworthy Property Management
Look Closely at Property Photos and Details
It’s hard to feel confident in the property you buy without first seeing details photos and videos. So make sure to see plenty of pictures of the property and take a virtual tour, if possible.
Additionally, long-distance landlords should review all the property details, such as inspections, insurance quotes, and title reports. You can also check out neighborhood details and local school ratings to see if the area is worth investing in.
Begin the Loan Process Early
Once you’ve decided on a property, it’s good to start the loan process early. Get preapproved for a mortgage beforehand, so you know your maximum finance amount, interest rates, and loan fees.
Additionally, getting a preapproval letter lets a seller know that you’re serious about buying the property. It also reduces the risk of a sale falling through due to financial issues.
Hire Trustworthy Property Management
Suppose you’re a long-distance landlord and need someone to manage your properties. Look at trustworthy rental property management companies in Northern Virginia. When you hire a professional company to manage your properties, you don’t have to worry about rental registration, tenant screening, rent collection, maintenance, and more. Instead, all you need to do is account for a property management fee, and your managers will take care of your rental unit for you.
Mistakes For Long-Distance Landlords to Avoid
When you buy rental properties outside of your local area, you’ll want to make sure things go smoothly. However, there are a few mistakes investors may make. For example, not researching the area enough or rushing the buying process. If you’re a long-distance landlord, here are some common mistakes to steer clear of.
- Not Asking Enough Questions- Before you buy a rental outside your immediate location, you’ll want to ask questions about every aspect. For example, the noise levels in the neighborhood, when the last home improvements were, and how old the appliances are is all vital information.
- Skipping Inspections- Skipping home inspections is a massive mistake for long-distance landlords. If you don’t conduct a thorough inspection of the home, you could be buying someone’s problem property.
- Writing an Offer Too Quickly- Although you may think the property is perfect, don’t rush the buying process. Instead, take your time to look through all the property details and financial information to ensure your decision is final.
- Going Forward Despite Red Flags- If too many red flags pop up regarding the property, think twice about going through with it. For example, if the seller doesn’t have much information about the property or can’t answer your questions, you may want to reconsider.
Reach Out to Local Property Management
Being a landlord can be extremely time-consuming, even if you live close to your rental properties. When you’re a long-distance landlord, it can get even more hectic. Whether you own properties locally or outside your immediate area, property management services can help your rental business succeed.
Bay Property Management Group has dedicated and experienced management professionals to help with the day-to-day tasks of your rental property. Whether you need help with tenant screening, rent collection, maintenance, and more, our services have you covered.
Contact Bay Property Management Group today if you need management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.