In areas like coastal cities, finding an affordable property is becoming increasingly difficult. This has encouraged many people to consider properties outside their city. They feel that properties lying outside the city might offer better returns on their investment.
While the numbers might indicate that this is true to some extent, investing in a far-away destination is risky in many ways. Here are a few things to consider before buying a home in a far-away locality.
Managing your investment
If you invest in a property in a far-away locality, you will probably find it difficult to manage it properly. You have probably heard about small landlords making better returns on their investment after buying property in distant suburbs. But remember that they achieve this because they manage their property on their own.
Hiring a firm to manage your property is not a cost-effective solution. For one thing, you will have to pay a management fee. What’s more, there is no guarantee that they will manage the property the way you would like them to.
Remember that the only person who is really interested in finding good tenants for your property and then maintaining good relationships with those tenants is you. You can’t expect an investment management firm to do it with the same sincerity.
After all, it is your investment. You want the rental checks to arrive without fail. This will not be possible if you don’t have reliable tenants. What’s more, if you manage your property on your own, you will be able to keep expenses low.
Resolving property issues
If your property is located in a far-away destination, you will not be able to monitor it closely. If problems arise, you will probably have to take some days off work to visit the property and solve the issue. Are you willing to do this? This is an important question you need to ask before buying property outside the city.
On the other hand, if your property is close to where you live or work, you will probably have no difficulty getting there and working with the tenants to fix any requests for maintenance. Since you can’t keep tenants happy without solving any issues they have with your property, this is not something you can ignore. And what if major problems arise? Do you think you can expect a total stranger to repair the damages on your behalf?
Finding the best investment deal
As a small investor, your safest bet is to buy a property that can be reached in an hour or two. And when you invest in a familiar locality, you should already know if any problems exist there. What’s more, if problems arise after you buy the property, you will be able to solve them faster. This makes it possible to have better relationships with tenants. What’s more, when they vacate the property finding another tenant will not be difficult either because you know the real estate agents in your locality.
If you really want to buy property out of town, you should talk to other investors who have invested in properties in the same area. Ask them what issues they have faced over time. Remember that you have to do this before committing to a long-distance investment deal.
Be sure to consider the advantages of knowing the true value of your home. You can obtain a free home valuation report from Neighborhood IQ to find out how much a property is worth, especially after your fall and winter home improvements and maintenance projects are completed. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.