You live in a great part of the country. The weather’s fine, the amenities are good and you’re hoping to invest in a single-unit property. Only problem is the property market is hot and like many areas in the country, there’s a genuine shortage of real estate stock. Finding a good deal is getting harder, there’s so much competition…
So you turn your attention to some of the long-distance locations you see online, thinking they may present a better option. While out-of-town localities can look promising, they come with their own set of problems and have some noteworthy drawbacks.
Out of Town, not Out of Reach
Distance can be an issue; while a two or three hour drive doesn’t seem very far at first, it quickly becomes old when you’re negotiating a new lease. A good rule of thumb is to purchase your real estate investment within an hour or so drive of where you live. This allows you to be hands-on, solving problems, doing the groundwork when it comes to leasing the property when vacant and maintaining a good relationship with your tenants.
Before you decide to purchase, talk to other long distance property owners who live far away from their single-unit investment properties. Find out what their experiences have been, the problems as well as the perks.
D-I-Y Property Management
Traditionally the single-unit investment property has been the domain of the small landlords who are both investor and property manager. Unlike a multi-unit property, the returns on single-units are modest and the margins small. The best person for the position of property manager is the one with the most to lose if the tenants abandon ship, mid-contract and that person is usually the owner.
It’s tough, laborious work, finding good tenants, cultivating a solid relationship with them and keeping them happy. But generally, it’s the small landlords who manage their own properties that get the better investment returns. It’s surprising that management fees aren’t necessarily the reason for do-it-yourself landlords; they have the most to gain or lose if their property is not performing to the max.
The one person who’s got the most motivation to put in the work required will be you, the one who’s invested the money. That’s a powerful motive to continue generating rental income and keep the tenants happy while holding expenses down.
When Problems Crop Up
Imagine yourself in some of the different scenarios a landlord/property manager might face over time. Something happens – a burst pipe in the basement, storm damage on the roof – will you be able to go to the property, see to the repairs, meet with the insurers and take the time off from your day job? If your investment is closer to home, you’d be able to get there to work with your tenants to address any issues that arise.
Problems crop up, it’s a given, but when they do, you’ll always be the best person to alleviate any losses and diminish the costs. Single-unit investment is always easier, closer to home.