If you have been thinking about getting into the business of rental properties, there are many things to consider such as the number of units should you purchase and the amount you should spend just to name two. But one other consideration you don’t want to overlook is the idea of buying property in a location other than where you live. If you’ve never weighed the pros and cons of buying rental properties in different cities, read on.
Of course, buying rental properties in different cities come with their own sets of problems, but there are also solutions that make it possible to keep those properties on your list instead of scratching them off immediately due to location.
Property checks, signing contracts and collecting rent can be more difficult if you are buying rental units in a different city from where you live. You don’t want to go back and forth constantly, so it might be wiser to hire a management company or just a property manager to help you with these tasks. Normally you would put location in the con side of the equation, but there may be reasons to list it as a pro instead. Keep reading.
You don’t want to buy a property that’s so far beyond a fixer upper it should be condemned, but how do you do that from another city or town? As it turns out, there are real estate companies specializing in turnkey rentals that can help you find properties in good condition in your price range and turn this con into another pro.
Even when you buy a property in good condition, it will still need repairs at some point in time, as all homes do. When you find it’s time to make some upgrades and repairs you will want the work to be done fast but also done well, which is why a good relationship with your repair businesses is very important. From a distance, this can be much more difficult. You don’t know the extent of the damage if you haven’t seen it, so how do you know you aren’t getting charged for repairs that aren’t actually being done? That’s where having a property manager you can trust will be very important if you are managing rental properties from a distance. I would put this in the list of negatives for purchasing properties in different cities, unless you do hire a property manager to assist you.
Your dependence on a property manager or management company will cut into your profits. However, it could be a cheaper alternative than you commuting constantly to handle these tasks yourself, so whether you put it in the pro or con side when you are considering rentals in different cities is up to you. Keep in mind, the property manager is also taking care of the day to day hassles of being a landlord so you don’t have to.
Without a property manager, driving by your property to make sure it is being well cared for by your tenant isn’t going to be possible on a frequent basis if at all. If you don’t have a manager, put this in the cons.
The market is limited because there are only so many properties in your location that are available for you to purchase. But you can turn this con into a pro when you can look for properties in multiple locations because you have many more opportunities to invest in rental properties.
Hopefully, the value of your rental property will increase over time allowing you to sell for a profit in the future if you decide to get out of the rental business. But the potential for increase in your investment property can be better in some locations than others due to the market in those areas. Therefore, having the ability to buy rentals in different cities can be a pro. Platforms like AssetColumn.com make it easy for you to make wholesale real estate investment in multiple cities.
Although there are several pros and cons of buying rental properties in different cities, as you can see, it can be done. So don’t limit yourself and don’t settle for a property that may not be right for you simply because it is close to where you live.
Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.