- 5 Steps to Become a Successful Real Estate Investor
- Common Risks in Real Estate Investment and Speculation
- Different Ways of Investing in Real Estate
- Ensure Steady Rental Income by Investing in Apartment Complexes
- How to Be a Smart Commercial Real Estate Investor
- How to Make the Most of Real Estate Investment
- Investing in Land: Is Land a Good Investment
- Investing In Real Estate for Retirement Income - Is It Right for You
- Real Estate vs Stocks: Which is Better Investment?
Investing in Rental Property: Local vs Long Distance
Investing in real estate should always be a well thought out process. You can't start having regrets after you have invested in the property. This is especially true for rental property. When you want to invest in rental property, you have the option of purchasing it in your hometown or investing in another town. Both are just fine as long as you make a wise purchase decision.
At the same time, opting for local or long distance rental property come with their own pros and cons that you should be aware of. Sometimes, it becomes necessary to take a step back and take in the whole picture rather than restricting yourself to just what you can see and feel.
Pros and Cons of Long Distance Rental Property
One of the best parts about investing long distance is that you are not restricted by geography. If you have done your research well, you will be able to shortlist those cities and neighborhoods where rental properties are performing well. You can invest in the same state, another state or even overseas, depending on your budget and appetite for risk.
However, the fact that you don't know the city well can prove to be a pitfall. You can visit the city and even do thorough research on the Internet, but this will not give you the true picture of the city or the neighborhood you are interested in. As a result, there is always a margin of error that can work against you when investing in another geographical location.
Since you cannot be physically present to handle the management and address tenant needs and concerns, you will need to hire a property manager. While you can go with a property management firm, it makes sense to hire an individual who has vested interests in ensuring your property is maintained well and all tenant problems and concerns are addressed according to the prevailing law.
Your choice of property manager can be flawed and this can be counterproductive. But the good news is you have the option of firing your property manager and hiring a new one who works for you and in the interest of the property. Just make sure your choice of property manager is well-researched. Conduct a thorough background check and don't forget to follow through on references. After all, it is your money and you want the best ROI possible.
Advantages and Disadvantages of Local Rental Property
The biggest advantage of investing in real estate locally is you know your city inside out. You can visit neighborhoods without issues and check out properties, local amenities and more to make an informed decision.
Ability to Evaluate before Purchase
You can personally evaluate the property rather than believing what the real estate agent tell you. This helps you decide whether the property and the neighbor are worthwhile. The real purpose of a rental property is to form a new stream of revenue and income, and if that doesn’t pan out, it will be a loss for you. So evaluation personally and by a professional will help you decide whether the shortlisted property is worthy of your investment.
You will always be biased to your hometown and hence, you will not be able to isolate its flaws in an objective manner. You may end up investing in a rental property because the neighborhood or town holds a special place in your heart. This is not the best way to decision if you want to get into the rental property business.
Hence, it is important to cast your feelings and emotions aside. Think like a businessperson and select a property in your town or city after carefully looking at it from all angles. You have the ability to do this without spending money on long commutes and you should take advantage of it.
Whether you want to purchase rental property locally or long distance, research is the key to make a sound real estate investment. Consider pros and cons of both types of investment and then decide which one works the best for you. This will help you make an informed decision that will reap the return on your investment as envisaged.