Owning rental property is a great way to expand your investments and create passive income. With so many types of rental properties on the market, there are many ways to be a landlord. While some individuals will rent out homes in their own city, others will manage properties out of state. This can present an exciting yet challenging opportunity. This guide will break down the basics of out-of-state property management and some ways to make the job easier. By considering the benefits and difficulties of this type of property ownership, you can effectively prepare to find the right tenants and maintain your units.
Why buy out-of-state property?
Each landlord has a different reason for managing property out of state. You might have a piece a property in a popular vacation area, which can be a lucrative opportunity. Some landlords may also be looking to spread their properties around the country, or they might purchase property with the intention to retire there later in life. If you have recently moved to a different state, you may choose to keep your properties instead of selling.
What challenges can you expect while owning out-of-state property?
One of the main challenges of renting out homes and apartments in other states is local laws. You will need to understand landlord-tenant laws, property taxes, building codes, and other municipal regulations. You will likely need to find a lawyer in the area to work with. It may also be challenging to understand the neighborhoods in the city where you own property. Unless you lived there in the past, you will need to do research on the local schools, activities, and businesses in the areas where you are renting out homes.
How can you handle tenant relations?
Tenant-landlord relations are one of the most critical parts of managing property, but this can be difficult when you live out of state. For example, if a maintenance issue arises, they will need to get in touch with you by phone. You will then need to call a maintenance professional to send them to the property. However, you won’t be present for the repairs. Time zone differences can make this extra tricky. To effectively manage these situations, you will need to have strong connections with reputable contractors in the area.
When it comes to finding the right tenants for your units, an online rental application form can be an excellent resource. You can get basic information and interview tenants without needing to be there in person. And if conflict arises, it’s essential to be accessible by phone and email. Strong communication skills can compensate for a lack of physical presence.
When should you hire a property manager?
One of the best ways to responsibly rent out properties in a different state is to hire a property manager. However, because this is an investment, you should consider some factors. Landlords who do not have the time to devote to managing their own properties or those who own many properties could benefit from property management services. If the cost of property management fits comfortably into your budget, then it can also be worth the investment. A property manager will understand local laws and the local housing market. They can also be a great resource for managing tenant relations and maintenance. With the right preparation and resources, out-of-state rental properties can be a great source of income. However, you can always choose to sell if the buildings and apartment units become too much of a burden. In the meantime, managing property across state lines can diversify your assets and open up your future opportunities.