Did you know that owning out-of-state rental property is gaining in popularity among savvy investors? While it‘s more convenient to own real estate close to where you reside, investing in property located in various hotspots can increase investment profitability.  

Tom Schneider shares four key reasons for purchasing an out-of-state rental property.  

• • To invest in geographic areas where population and job growth are robust. 
  • To diversify a rental property portfolio with markets that best match your investment strategy. 
  • To focus on the type of returns you‘re looking for—maximum cash flow, high appreciation, total yield over the targeted holding period, etc. 
  • Because operating expenses are lower in markets with fewer regulations, lower property taxes, and landlord-friendly laws.      

However, if the reasons add up and you decide to pursue properties away from home, it‘s critical to be prepared for numerous challenges, such as not being familiar with—  

• • The personality of each unique community. 
  • Who are the best real estate professionals in the area. 
  • The local laws and regulations regarding property ownership and property taxes. 

 By addressing these issues proactively, you can turn an out-of-state rental property purchase into a successful venture via the tips noted below.  

Compile a team of professionals 

In addition to a real estate agent, you will need a contingent of professionals well-versed in everything from the home inspection to home improvements to local guidelines to property management. You‘ve amassed a local team of pros whose trustworthy services are only a phone call away for your local investments. Now the challenge will be to compile a similar ‘squad’ in this new location. Even if you have chosen to oversee the rental properties near where you live, it isn’t feasible to manage them from afar. The key ingredient to out-of-state rental success lies in connecting with an excellent property management company. When you aren‘t close enough to keep an eye on the property yourself, a dedicated property manager’s role rises to priority number one. And these folks can often point you in the right direction when it comes to filling the other spots on your team of professionals.    

Raise the level of research several notches  

Potential out-of-state purchases will require an over-the-top amount of research compared to what you would expect to do for a local purchase. In addition to the “normal“ research on the property‘s history, improvements timeline, etc., being unfamiliar with the area will necessitate adding more to-be-researched points. This extended list should include crime statistics, school ratings and reviews, the sale price of comparable homes, and utility rates. This lists just some extra info you‘ll need to make this a profitable venture.   

Investing in out-of-state rental property. Challenging, yes, but it can be profitable and rewarding as well.  

About Rentals America 

Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management and we’re here to help landlords navigate the rental market. 

Rentals America manages properties in Phoenix, Tucson, Las Vegas, Dallas and the  surrounding areas for both local clients and those from out-of-state.