When it comes to being a savvy real estate investor and landlord, it’s important to look at opportunities beyond your immediate location. A smart real estate investor searches for rental properties to acquire out of state in highly profitable markets, like the Phoenix area.
As a landlord who is still new to the real estate industry, you may feel more comfortable investing in an area you’re already familiar with. You know the desirable neighborhoods and have connections with local maintenance and repair companies; these are valid reasons!
However, you could expand your real estate portfolio drastically when you take a chance and explore rental properties out of state. In this article, you’ll learn the ins and outs of managing an out-of-state rental property and our number one secret to a successful out-of-state investment.
Why Landlords Invest in Out-of-State Rental Properties
If you already know your residential area and even own properties there, why would you acquire a property in an unfamiliar area?
There are quite a few reasons, actually!
Take Advantage of a Thriving Market
Real estate investors are most profitable when they take advantage of a thriving market. This could be an area that is expected to develop significantly in the next few years and drive-up property value.
According to Real Estate News, some of the fastest-growing places in the US include Reno, Orlando, Charlotte, and Phoenix. Landlords that live in California that want to take advantage of the booming market in Arizona will invest in out-of-state rental properties.
Sometimes there is more money to be made outside of your hometown when it comes to rental properties.
You Find a Great Deal
Sometimes a once in a lifetime deal comes your way, and it is impossible to say no. Maybe you found a rental property that is just perfect, and you can purchase it for much less than it’s actually worth. The only catch is that it’s out of state.
Once you learn how to manage an out-of-state rental property, these fantastic deals won’t seem so intimidating anymore. You’ll quickly realize just how much you can grow your portfolio when you don’t limit yourself to one area.
Tax Benefits
Some states have implemented programs that offer tax benefits to real estate investors. This could involve tax deferments or tax breaks if you invest in a certain area.
Plus, you can also write off travel expenses when you visit your out-of-state rental property for whatever reason – giving you even more reason to look into investing out of state.
You Inherited Out-of-State Property
Many landlords find themselves managing an out-of-state rental property after inheriting it and deciding to rent it out.
When an experienced landlord inherits a property, they likely will not sell it right away. They will find tenants to live in it and use that money to maintain the property rather than let it sit there empty until they decide what to do with it.
How to Manage an Out-of-State Rental Property
Managing an out-of-state rental property doesn’t have to be difficult. If you already have experience managing a rental property near your residence, you won’t have a problem adjusting to managing one out-of-state.
Build Your Local Network
When acquiring your out-of-state rental property, make an effort to build your network in the area. Talk to the neighbors, meet with contractors and repair companies, and connect with local real estate agents. These connections will help you in case of emergencies and general maintenance.
It’s a good idea to have someone trustworthy in the area who doesn’t mind checking in on the property and your tenants once in a while. In the event of an emergency, this person can help out until you can get to the property too.
Automate Your Processes
With the state of technology we have nowadays, you can almost entirely virtually manage your out-of-state rental property. Set up rent collection through an online platform where your tenants can pay rent each month. This will save you a trip from going to collect a check each month.
You can also manage maintenance requests automatically with some landlord management software. Your tenants can submit a request, and you can directly contact the necessary repair service.
Find High-Quality Tenants
Take your time to find high-quality tenants to live in your out-of-state rental property. When you allow tenants you trust and are qualified to sign a lease, you won’t have to stress about your tenants not paying rent on time or damaging the property.
How do you find high-quality tenants? With a thorough tenant screening process.
During your search for a new tenant, make sure to run extensive background and credit checks on them. Ask for tenant references to speak to and verify the information the prospective tenant has provided. This will help you determine who is a high-quality tenant and who is not.
Keep an Open Line of Communication
It’s crucial to keep an open line of communication with your tenants and anyone involved in checking in on the property.
Let your tenants know that they can contact you with any maintenance issues or questions they may have about the property. This will ensure you know what is going on with the property most of the time.
The Ultimate Secret to Successfully Managing an Out-of-State Rental Property
While you can self-manage an out-of-state rental property, it does come with some challenges you must navigate through. Mistakes will be made, but you’ll learn from them.
One way to avoid any mistakes when investing in the Phoenix, AZ, rental market is to hire a local property management company to take care of everything. A good property management company can also help you assess deals and project profitability based on their local expertise.
From acquiring new tenants to coordinating maintenance and repairs to handling late-night calls, you will rarely, if ever, need to travel to your out-of-state rental property when you work with a reliable property management company.
If you’re considering buying rental property in the Phoenix, AZ, area, Brewer & Stratton Property Management will manage it for a flat monthly rate with zero startup fees and a 12-month tenant guarantee. We’ve been helping out-of-state investors thrive in the Phoenix market for over a decade.
Are you ready to enhance your real estate portfolio by investing in out-of-state property? Increase your revenue even more when you learn the 8 Key Components of Long-Term Rental Property Success next.