Investing in rental properties outside of your local area can be lucrative and enable investors to take advantage of strong housing markets in other parts of the country. However, being a landlord from a distance comes with its own set of unique obstacles to navigate. Overcoming the challenges of out-of-state real estate investing requires careful planning, the right local team, and effective systems to manage your properties remotely. When done correctly, remote real estate frees investors to dream big.
The Challenges of Remote Property Ownership
One of the biggest hurdles of long-distance landlording is not being able to keep a close eye on your properties in person. When you live far away from your rental investments, it's much harder to notice issues, perform routine maintenance, and respond quickly to resident needs. Minor problems left unaddressed can spiral into bigger, costlier headaches down the road.
Building a Local Team You Can Trust
"The key to successful out-of-state investing is building a strong local team you can trust," said Kent Clothier Sr., CEO of REI Nation, a company offering turnkey single-family investment properties and property management services. "Having reliable people on the ground acting as your eyes and ears is absolutely essential."
Partnering with an experienced local property manager is typically the best way to handle the day-to-day oversight and upkeep of your remote investments. A good property manager will conduct regular inspections, coordinate any necessary repairs or maintenance, handle rent collection, and address resident requests. They provide the local presence you need to keep your properties in top shape.
In addition to a property manager, landlords need a team of local contractors, real estate attorneys, and other professionals to assist with various aspects of the rental business. Take the time to thoroughly vet any potential partners and check references to ensure they are reputable and reliable.
Communication Is Key
Effective communication becomes even more important when you're a long-distance landlord. Establishing clear expectations and protocols with property managers and any other local partners, like contractors, is crucial. Landlords need to be kept in the loop about any issues with properties or residents, while the team needs to understand short and long-term goals and how things should be handled. Regular check-ins and detailed record-keeping are musts.
Setting up regular meetings or calls with the property manager to review any updates, discuss upcoming maintenance needs, and address any concerns keeps lines of communication open and ensures everyone stays on the same page, catching potential problems early.
Leveraging Technology and Tools
In addition to hiring a local team, implementing the right technology and tools will help you stay organized and efficient as an out-of-state investor. Property management software securely stores all records, documents, and communications in one centralized place. Many platforms provide convenient online portals that allow residents to pay rent and submit maintenance requests easily. It can also automate key parts of the business, like rent collection, which is especially helpful when managing properties remotely.
Other helpful tools for long-distance landlords include digital document signing for leases, online rent payment systems, and virtual video inspections of your properties. By leveraging technology, you can streamline your processes and reduce the need for back-and-forth communication or in-person visits.
Implementing Systems and Processes
Another important solution for long-distance investing is having clear, well-documented policies and procedures in place for all aspects of the rental business. From resident screening to rent collection to property maintenance, having standard systems that you and your team follow will keep everyone on the same page. Well-written lease agreements that plainly spell out the rules and responsibilities for your residents are also essential, as is enforcing them fairly and consistently.
"Successful out-of-state investing is all about being systematic," explained Clothier. "Having step-by-step processes in place allows you to manage things efficiently and avoid confusion or costly mistakes."
Take the time to create detailed, written procedures for every key task involved in running your rentals. Include checklists, templates, and step-by-step instructions that anyone on your team can follow. Having well-documented systems ensures your business can run smoothly, even when you're not there in person to oversee everything.
Be Realistic About Time and Effort
It's important to be realistic about the amount of time and energy long-distance landlording requires, especially in the beginning as you get set up. Even with an experienced property manager and refined systems in place, investing out-of-state is not a completely hands-off endeavor. You will still need to devote time to regularly reviewing reports, analyzing your financials, and keeping up with the latest rental laws and best practices. You may need to travel occasionally to visit your properties in person as well.
Long-distance landlording can be more time-intensive than investing in your local market, so make sure you have the availability and energy to devote to it. If you have a full-time job or other significant commitments, be honest about how much you can realistically take on. Start small, with just one or two out-of-state properties, before gradually growing your portfolio.
Achieving Financial Freedom through Out-of-State Investing
While managing rental properties from afar has its challenges, it also enables investors to grow a portfolio beyond their local area and accelerate investing goals. By assembling a trustworthy local team, maintaining clear communication, and leveraging helpful technology and tools, you can set yourself up for success as a long-distance landlord. With the right preparation and partners in place, out-of-state investing can be a rewarding way to achieve greater financial freedom.
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* This is a contributed article and this content does not necessarily represent the views of realtytoday.com
