Location of property has great importance in real estate investing. While most investors prefer to buy properties in their own cities, there is no dearth of investors who choose properties in locations outside their own cities. Though there are preferences of investors regarding the location, experts believe that an investment property should be within driving distance or directly connected through flight. Here are some points to keep in mind when deciding on the location of your investment property.
Local real estate
It always makes sense to buy a property with good returns on investment in your local housing market if the conditions are right. Here are some important benefits of investing in local real estate.
Cost is low
Lenders always show reluctance to financing a property outside the state. They offer a higher mortgage rate for a property when it is outside your state. Similarly, you face higher insurance costs when the property is outside your state. You can lower both these costs by buying a property in your own state.
Convenient
If your mode of investment is rental income property, buying a property close to you is highly convenient from the point of view of management. You can be there in the premises whenever your tenants need your presence. You also feel more in control when the property is located close to your own home.
You can avail your team of vendors
It is natural for you to have a solid team of vendors, investors, and brokers in your own area of operation. This network of professionals proves to be a big help when investing in local real estate. You know the lenders and enjoy good relations with property managers.
You have good knowledge of the housing market
Though times have changed, and one can learn a lot about remote housing markets through web, there is still no substitute for firsthand knowledge of a housing market. This knowledge about prices, values, and real estate trends keeps you in good stead when buying a property in local markets.
Non-local real estate
Though considered risky, many investors have made a fortune by investing in non-local real estate.
Higher returns
It is true that it feels safe and convenient to invest in local real estate but even investors know that non-local real estate always delivers higher ROI. Not all housing markets are good, but you have the liberty to choose the state where you can hope to earn high ROI.
Lower taxes and insurance rates
It may be surprising, but property taxes and insurance rates vary across different states in the country. If you are paying more in your own state, you can easily take advantage of lower rate in other states to obtain more profits from your real estate investments. It is only a matter of doing some research on property tax and insurance rate to find out which states are more profitable for you.
Less complicated rules
There are some states where not only higher taxes are charged by government on rental income, but landlords are also subjected to complex rules and regulations. If your own state happens to be one such state, it is advisable to move out and find a state where there are fewer legal hurdles and where you must pay smaller amount of taxes on your rental income.
You can always hire a property manager
One disadvantage of investing in non-local real estate can be easily overcome if you hire a good quality property management company. It solves all your problems of distance and time and allows you to reap the rewards of investing in non-local real estate.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
