Back HomeOut of state rental investments: A primer
If you’re not from Texas, investing in a property in the Lone Star State is a great way to diversify your portfolio. Buying a rental house or building in a different state can strengthen and expand your investment strategies and increase your ROI.
As in any other business, running a rental from hundreds of miles away can be challenging. However, with the right planning and support, it can turn out to be one of the best financial decisions you’ll ever make.
Consider these tips on how to get started.
Research on the market
Is there a high demand for rental properties in the area you’re eyeing? Is it a growing market?
Look into a neighborhood’s economic development, its culture, population growth, and people. Take the time to understand how a particular housing market is performing. The most crucial factors to consider include:
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Location
The most ideal locations are those close to offices, schools, and commercial centers, as renters generally want to live near these places. While downtown areas are often the prime choice, nearby suburbs or neighborhoods with easy access to employment hubs also make great options. -
Population
An area with a growing population means potentially greater demand for rental properties. A lively and bustling economy and low unemployment rates are among the top reasons why people choose to move to a place. -
Property values
If homes in the area are too expensive, the demand for rental properties will grow. At the same time, you have to evaluate if the property prices fit into your budget and profitability goals.
Brush up on local laws
Tax laws vary from state to state. Some have local laws on rental properties such as rent control and stabilization. For example, in Texas, there is no state property tax. Those who are looking into the process of buying a house in Texas can find more information about the state’s tax laws here.
Work with Realtors who are knowledgeable about the area
Probably the most essential step after doing background research is selecting an experienced, knowledgeable, and trustworthy Realtor. The Realtor will be your eyes, ears, hands, and feet on the ground. If you are not able to visit the property in person, the Realtor can do a thorough inspection and evaluation on your behalf.
The right real estate agent is someone who knows the area like the back of their hand. They should be able to recommend reliable professional services, such as a local contractor, home inspector, title company, and a property management company or property manager.
When interviewing prospective Realtors, prepare a list of questions to ask. Make sure to include questions about their track record in real estate investments in the area. Find out about their local knowledge and reputation. As your representative, the agent’s expertise is one of the most important tools you can have for a successful venture.
Double check your numbers
When it comes to out of state properties, crunching the numbers means having to go over your figures meticulously. A good rule to go by is to be conservative with the numbers. Use the lower expected rental figures instead of the highest. It will help to round up projected expenses in order to have some money ready for unexpected costs and emergencies.
Power up with a good property manager
Make sure to select a reputable property manager to handle day-to-day issues on the ground. The property manager is responsible for a myriad of details, such as marketing and showing the property to prospective renters, screening potential tenants, handling deposits and leases, collecting rent, coordinating necessary repairs, and even evictions.
As a remote investor, your property manager has to be someone you can fully trust and rely on. So it’s very important to put plenty of time and effort into screening and selecting one.
These are some of the qualities to look into:
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Trustworthiness
Look into a candidate’s track record, reviews, BBB ratings, and other feedback. Talk to two or three former clients and learn about their experience with the property manager. -
Experience and local knowledge
The property manager must be knowledgeable about the business, the location, and your type of property -
Responsiveness
You should be able to communicate regularly with your property manager in the manner you prefer. They should always be available to take your calls and answer your questions promptly.
Realtors that provide property management services, such as BHHS Caliber Realty, make great partners in your investment journey. They get to know your investment goals on a more intimate level, and are able to help you achieve them from the start. Having a longer experience with them, you also get to know them more thoroughly and develop a better relationship with them.
Invest in the Brazos Valley and surrounding areas with confidence
Looking to invest in rental properties in Texas? Our team at Berkshire Hathaway HomeServices Caliber Realty has over forty years of experience in residential and commercial real estate in the Brazos Valley area. We have the tools and expertise to help you achieve your profitability goals.
Reach out to us by calling 979.694.8844 or sending an email at sales(at)bhhscaliber(dotted)com.
