Investor Blog Articles

Investing in Long Distance Rental Property Part 2

8 Tips Every Out-of-State Investor Should Know:

Since it’s not always possible to invest in positive cash flowing investment property in many parts of the county, real estate investors often seek out investment property in markets that do provide positive cash flow. For some investors this means they must invest in a property that is not local to their primary residence. Investing in long-distance rental property can be very rewarding if done correctly and can also be a disaster is done incorrectly. In part 1 of this series, we discusses tips 1-4. In this article we’ll discuss tips 5-8 on investing in long-distance rental property.

5). Do Not Buy Un-Rehabbed Property:
It doesn’t matter how experienced you may be at rehabbing, doing it long distance is a nightmare. It’s hard enough dealing with contractors face-to-face, doing it long-distance is even more challenging. Every market has turnkey property providers. These are investors who buy foreclosures, renovate them, and sell them wholesale to investors. There are many so called, “turnkey” investors so make sure they are the real deal. Ask to see testimonials, and check out their sold properties. Make sure they’ve got a good history and experience.

When buying an already renovated property, make sure it is indeed fully renovated. Ask for pictures and videos but always get a 3rd party inspection to verify everything is in top working order. Some investors will offer a wholesale property at a rock bottom price and claim it only needs $10,000 in work. Avoid these properties no matter how attractive the price. Many investors bite on what I call the “cheap factor” and will buy because they can’t pass up on the cheap price. Some investors will offer to do the rehab for you once you buy. I recommend avoiding these types of deals as well. Why buy a property then have 4-6 weeks or longer to get it rent ready? Why not buy an already renovated and preferably already rented property.

6). Work with the Best:
Build a team of the best property providers, insurance agents, lenders, appraisers, property managers, title companies, maintenance workers, etc. Your team will help you be as successful as possible. Always ask who is the best at what you need in that market. Ask to join their newsletters and social media sites. They will most likely provide valuable information about market trends and information that will be helpful to learn. Fortunately, if you are working with a turnkey property provider, they will gladly share with you their contacts. We refer our investors to our team because we know their commitment to excellence.

7). Choose the Right Property Manager (PM):
The best relationship is one where both investor and PM have a clear understanding of each other’s expectations. Each property manager has a different style and a different way of doing things. Find out what their policies are as far as collecting, maintenance, vacancies, evictions, etc. and make sure you agree with those policies. Be clear on what decisions he/she can make on hiss/her own and which ones you would like to be involved in making. Once you have an understanding on how the property will be managed, step back and let the PM do their job. I’ve seen investors reluctant to give the PM enough control to do their job effectively. Choose a property manager that has experience with non-local investors. Explain the type of communication you want to have. Remember, the PM is your eyes and ears since you are not physically there. Again, the right turnkey property provider will already be working with excellent property managers.

8). Don’t Sweat It!:
Don’t lose sleep over your property. Some properties perform better than others. That’s just the nature of rental property no matter what. I’ve got properties that have had the same tenant for years and who always pay on time. I have other properties that don’t do as well. Relax, that’s part of owning rental property! If a property is not performing, take action, correct the situation and move on. Successfully investing in long distance rental property requires a certain degree of patience and trust.

In conclusion, by following these 8 tips, you can confidently invest in long distance rental property. Remember, rental property should be passive income. Set it up correctly and your property will provide income will very little to no effort on your part.

Happy Investing!

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to invest in long distance rental property, visit our site and download our FREE tools “Rental Income and Expense Tracking worksheet” and “Cash Flow Analyzer.”

Bookmark It