Purchasing Out of State Rentals
One of the ways that real estate investors can expand their business is by purchasing properties out of state. Moving into a new market out of state can present some challenges to you but with a strong plan in place, much of that risk can be mitigated. With that said, there may be some initial hesitation to start purchasing properties out of state so in this post we’ll look at three things you can do to provide you with the confidence you’ll need to expand your rental property portfolio into new out of state markets.
1) Hire a property manager
Since these new properties will be out of state, you will need to hire a property manager to manage the property and make sure rent is collected from the tenants each month. A property manager would also be able to perform any maintenance requests that arise from the tenants living in the property. When you’re looking for a property manager it’s important to have a set of criteria that you want your property manager to meet and find three to four candidates to choose from. Once you have those candidates to choose from you can begin requesting references from current or former clients who will verify the quality of the property manager’s work.
In addition to hiring a property manager, you’ll want to research your new market and begin to build a network of contacts with vast knowledge of the area who can help you be successful in the market. These people can be trusted industry professionals such as appraisers, inspectors, and real estate agents. Having them as a part of your real estate team will help you find properties that fit your criteria (i.e. budget and location) as well as perform onsite inspections to confirm the condition of the property. Building a trusted team of industry professionals can provide you with the confidence you need to grow your rental portfolio with out of state properties.
3) Screen for the right tenants
Another key factor towards owning a successful rental property out of state is the quality of the tenants. A bad tenant can ruin even the best property so it is extremely important to screen tenants before allowing them to rent your property. Conversely having excellent tenants can alleviate some of the stress with owning rentals, especially properties that are out of state, and can be dependable to pay rent on time and take care of the property as if they owned it. Check out our blog post on screening tenants to see some of the steps you can take and what to look for when taking rental applications.
Owning rental properties is one of the best ways for real estate investors to build wealth and gain multiple streams of passive income. Expanding into new markets presents a great opportunity but also has its challenges. By utilizing these three steps, you can confidently expand your rental property portfolio out of state and meet your investing goals.
At Lima One Capital we provide a suite of industry leading rental products that are designed to help investors grow their rental portfolio with the speed and efficiency needed to close deals quickly. We lend across the country in 41 states as well as Washington, D.C. It is our mission to be the nation’s premier lender for real estate investors and provide you with the industry leading financing to be successful. To learn more about Lima One Capital’s suite of Rental products click here.