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What to Know Before Buying Rental Property Out of State

System - Tuesday, September 20, 2022
Property Management Blog

Three of Florida's cities rank in the National Realtors Association list of top places in America where people are buying homes. The thriving real estate market and warm weather make it an enticing place for people looking to buy property out of state. However, there are potential pitfalls that come with buying a property that's far away from your home. 

Keep these tips in mind if you are considering buying rental property out of state. 

Learning a New Market 

You already know that location is the mantra of real estate, so it's wise to buy in an area that you know intimately. This is typically in a real estate market close to where you live. Buying out of state rental property is more of a challenge because you do not personally know the market or area. 

Without thorough research, you don't know if the rental property's neighborhood is on a decline. Or perhaps there's future planned infrastructure or commercial construction that could tank a property's value.

You also need to know the current market status. Are the current market prices inflated or a great deal? 

What Are the Taxes? 

If you want to be successful at real estate investing, you need to know what your ROI is. There could be city, county, and state taxes for the rental property you purchase.

If you don't do your research, you could purchase a piece of property with more expenses than expected. This could swing a potentially profitable property into one that's losing money. 

The Local Landlord and Tenant Laws

Some federal laws affect your role as a landlord, such as the Fair Housing Act. However, most landlord/tenant laws are on a state level. These laws can vary significantly from one state to the next, so don't assume that you know the laws in another state. 

For example, if you buy a rental property in Florida, you must learn Florida landlord-tenant law. A safe approach is to work with a local property manager who will know all of the applicable laws. They can ensure you follow the law and don't open yourself up to a tenant lawsuit. 

Who Will Manage the Property? 

Owning rental property is not a passive, hands-off investment. When you own rental property near where you live, you can easily respond to emergencies and hire contractors. This isn't so much the case when the rental property is in another state. 

Hiring a property management firm is your best bet. They are close so that they can respond to an emergency. They also have relationships with local contractors, so they can have repair and maintenance tasks addressed in a timely manner. 

Consider Buying Rental Property Out of State

There are plenty of benefits to buying rental property out of state. However, you are still buying real estate, so you need to approach your long-distance purchase with due diligence. With the proper research and planning, you can smartly buy a piece of rental property in another state by avoiding some of the common pitfalls. 

Contact our property managers and have a trusted professional managing your out-of-state rental property.