Managing Out of State Investments? Here Is Some Help
Making out-of-state investments can help you create a diverse portfolio while also gaining access to investment opportunities that you wouldn’t typically have. Despite the many advantages that are available when you make out-of-state investments, these investments can also be tricky to manage. If you’d like some help managing your out-of-state investments, here are five tips and suggestions that should make your life easier.
Consistently Monitor Local Real Estate Market
Even though you won’t be able to manage the property in person, you can gain a better understanding of what decisions you should make about your property by consistently monitoring the local real estate market.
Investing in real estate is a fantastic option for any portfolio. However, real estate investments almost always require local knowledge, which is made more difficult when you are out-of-state. Despite the challenges that arise in this situation, you can still learn everything you need to know about the real estate market you’re investing in even if you don’t live there.
One option that has proven to be effective is to read the local news. If you’re investing in a larger market, there may be some local real estate blogs that could be helpful. There should also be some real estate investment clubs you could join on platforms like REI Networking and Facebook. All of these avenues will help you remain informed of the local real estate market for the area you’re investing in.
Automate Maintenance Requests and Rent Collection
If you’ve invested in a rental property and want to simplify the process of managing this property, you can select an online service that will allow you to automate all maintenance requests and rent payments. There are many online rent payment services that you can choose from, the best of which will pay out rent payments the day after receiving them. These same services and platforms may also offer automated maintenance features, which include ticket creation, ticket tracking, and forwarding to maintenance professionals in the area.
Hire a Reputable Property Manager
If you don’t want to manage your out-of-state investment on your own, you could always choose to hire a reputable property manager who will be able to handle these tasks for you. By hiring a local property manager, the property will be managed by someone who is familiar with the area and has experience in this line of work. Keep in mind, however, that you’ll likely need to pay a fee that amounts to 5-10% of the total monthly rent that you collect.
The benefit of this option is that you won’t need to deal with the frustrations that come with remotely managing an out-of-state investment. Property managers are required to set rental prices, handle tenant issues, screen potential tenants, manage repairs and maintenance work, and perform regular inspections.
Investing in a rental property is something that comes with a considerable amount of paperwork. Along with screening reports and tenant applications, you’ll receive bank statements, credit card statements, property taxes, mortgage payments, bills from service providers, and receipts from rent payments. Keeping these documents organized is essential if you want to avoid any unnecessary headaches.
Try to Visit the Property
Unless the building is in a completely different country, you should try to find some time to visit the property on occasion. You may want to visit for inspections or to meet with service providers. It’s possible that you’ll be able to benefit from deducting your out-of-state travel expenses on your annual tax return. If your trip is 100% related to business, you can deduct your travel expenses as long as the trip involves traveling to a state you don’t live in.
With these suggestions in mind, you should find it considerably easier to manage your out-of-state investments. Despite the hassles that come with making out-of-state investments, broadening your scope to out-of-state locations gives you the opportunity to generate greater returns and invest in a market that matches your strategy.