Regarding real estate, most landlords prefer investing close to home. After all, you enjoy the benefit of knowing the local market and the best contractors and can oversee the property personally. However, despite long-distance property ownership being less popular, it has unique advantages. Property owners who know how to make it work can even be a game-changer for their finances.
Do you wonder what the potential gains of investing far away are? Or how to improve your home when you live in another city? This article explores the top 3 benefits of being a long-distance landlord. We’ll also look at expert tips to successfully manage a real estate property when you live miles away. Stick around till the end for all the juicy details.
One of the most significant benefits of being a long-distance landlord is that it allows you to invest in other markets. While playing on your turf gives you the benefit of knowing the local field, it might not necessarily be the most profitable venture. What if your area is already saturated with rental properties or has a high vacancy rate? It would be harder for you to turn a profit under such circumstances.
However, when you expand your prospective investments to other cities and states, you enter a wider playing field. Whether it’s the next county or across state lines, you can tap into a more profitable market.
Another lucrative advantage of considering being a long-distance landlord is the tax deductions. As you might know, the IRS lets properties exclude specific bills necessary for the smooth running of their rental business. Travel expenses are one of such deductions you can make from their taxable income. Thus, that includes costs like bus or airfare, renewing your new driver’s license, and gas. Besides travel, you could also remove wages for the property manager and other local contractors you might hire in your stead. That would relieve some of the financial burdens of managing properties far away.
You will require help as a long-distance landlord, whichever way you spin it. Owning rental properties requires some supervision, and you won’t always be available. Thus, it would be best to consider hiring a local property manager to guide you on long-distance property management. These experts can act as your representative during emergencies or when you’re too busy.
In other words, by carrying the bulk of your landlord responsibilities, these professionals make your investment seem more passive. So while you might still need to make some necessary input and visitations, for the most part, you can lay back and enjoy your profits.
One of the best tips for investing from afar is to practice a thorough screening process. You’ll have an easier time managing your properties from a distance if your tenants are the responsible kind. Thus, it would be best to consider running a criminal background check, doing a soft credit pull, and calling their previous landlord references.
Another hack is to create a strict lease. Avoiding costly legal battles is crucial when you live far away from your rental properties. Since policies differ from one place to the next, it would be wise to consult a local expert that understands the laws. Of course, no rental agreement would be legally binding without the signature of both parties. Thus, you can have your representative get renters to sign a physical document or have your tenants sign a digital copy.
Thanks to technological advances, you can also rely on the help of property management software to help you. As a long-distance landlord, digital application solutions can make your job a breeze by making it easier to automate everything. This software’s most popular features include tracking online payments, communicating with tenants, and monitoring maintenance.
As a long-distance landlord, you’ll need someone with local knowledge and expertise to step in when it counts. This solution can make running your business a lot cheaper and more efficient. Thus, it would be best if you considered spending some time researching the top professionals within the area. Some local professionals you should consider hiring include a property manager, a real estate agent, and a lawyer. With these workers assisting you, managing your property from afar would be significantly smoother.
It’s normal to have reservations about being a long-distance landlord. After all, you have to relinquish control to a local third party. Moreover, it could be costlier without the proper knowledge and experts to guide you. However, if you can hack it, there are three top benefits of being a long-distance landlord you stand to receive. First, you can invest in a more lucrative market and enjoy more tax deductions and relatively passive income. Thus, it would be best to consider adding far-flung properties to your portfolio.
Success hinges on if you can make it work for you. Solutions to make your life easier include prioritizing your tenant screening process and creating a strict lease. It would also be wise to hire local real estate experts that can step in and help. A reputable property management company can connect you with the best contractors in your area.