As an investor, you’re constantly on the lookout for new opportunities to make money. If you’re considering buying an investment property, expanding your search to include out of state possibilities can be a great way to take advantage of profitable real estate options.
You know that investing is all about weighing risks and rewards, so it won’t surprise you that investing in an out of state property comes with increased challenges and uncertainties. Don’t let this stop you! By using a few simple tips, you can make investing out of state easier, and start making money faster.
Take a look at five key tips for buying investment property out of state.
#1 Map Out Your Motives
The first thing you should do as you outline your strategy is to determine if purchasing an out of state property is in line with your financial goals. The ultimate reason for purchasing an investment property is to get an impressive ROI, so you should take care to conduct your due diligence to determine which states offer the best possible outcomes.
Consider the following factors that can contribute to your ROI on a state-by-state basis.
- Purchase price
- Property taxes
- Mortgage rates
- Rental market conditions
- Property appreciation trends
If you’re considering purchasing a property in a big city, these conditions may be different from other areas of the state, so be sure to conduct city-specific research as well.
#2 Get a Lay of the Land
Although conducting research is key, there’s no substitute for getting to know somewhere in person. Exploring a town or city can help you feel out different neighborhoods, and your knowledge will help you market your property when the time comes to find a tenant.
If travel costs are holding you back, remember that investing in property is a long-term commitment, and sometimes you have to spend money to make money. Plus, you could probably use a vacation!
#3 Figure Out Funding Before You’re Ready to Buy
Mortgages are far from one-size-fits-all, so it’s important to research your loan options before you find your dream property. You don’t want to find the perfect investment, only to miss out because you don’t have your funding in order.
Get to know local lenders and consider getting pre-approved for a loan when you visit. Whether you plan to take out VA loans in Hawaii, conventional loans in California, or pay in cash in Alaska, having a plan will minimize the risk of losing out on a great opportunity.
#4 Safeguard Your Investment with an Inspection
This piece of advice should be applied to any property you’re considering purchasing, but it’s even more crucial when you’re purchasing in an area you’re less familiar with.
A thorough inspection should look at the following elements of any property:
- HVAC system
- Electrical wiring
- Attic (including insulation)
- Overall structural integrity
- Vermin damage
#5 Hire a Property Manager
As an out of state owner, you won’t be able to rush over in the middle of the night when a pipe bursts. This is where hiring a top-notch property management team comes in. They’ll handle the everyday logistics involved in keeping your rental property up and running. Hiring a property manager is a significant expense, but doing so will allow you to focus on more important aspects of your businesses and investments.
Property managers can help handle the following:
- Marketing Your Property – If you plan to rent out your investment property, vacancies mean a loss of potential profit. Marketing your property to potential tenants from a different state can be tricky, so a property manager is essential to keeping your property occupied.
- Vetting Tenants – The only thing more important than finding tenants is finding good You don’t want to rent your property out to someone who’s going to cause damages or who won’t pay their rent on time. A property manager can help stop these problems before they start.
- Repairs and Maintenance – Even if your property passed its inspection with flying colors, something will inevitably go wrong at some point. You need someone who can handle everything from emergencies to small cosmetic issues, so you won’t have to fly across the country every time a storm knocks a tree down in the yard.
You’re Ready to Find Your Investment Property
Now that you’re armed with some key tips and tricks, you’re ready to take the next steps. Investing in property is a smart strategy that can help generate passive income and provide a financial safety net for the future. By utilizing a smart out of state investment strategy, you’ll have the entire country as your potential market.