When it comes to buying a rental property, selecting the right location is very important. There are many aspects of location to consider when it comes to real estate investing, such as the neighborhood, the state, the city, the country, the population, the economic status, the infrastructure, etc.
Another critical aspect of location to consider is the distance from where you live. Is investing in houses for rent near me in 2019 a wise decision or should I go for out-of-state investing? Let us look at some of the advantages and disadvantages of investing in houses for rent near me. This will help to gauge if it is a good investment opportunity when buying an investment property.
Advantages of Investing in Houses for Rent Near Me
1. Good Real Estate Network
Investing in houses for rent near me provides an already existing real estate network to help with the investment process. You are more likely to have a number of local contacts of contractors, real estate agents, and other professionals.
Even if you don’t have certain contacts, it will be easier to acquire them from your current network. Getting contacts when investing in out-of-state rental properties is harder. This can slow down your investment process and chances of success.
2. Familiarity with Your Local Real Estate Market
It is important to understand the real estate market before buying an investment property. Investing in houses for rent near me is advantageous since it’s more likely that you’ll have a good understanding of your local housing market. For instance, you will have inside information on lucrative neighborhoods and the economic trends in that real estate market. Such information will help you in selecting the best rental property and rental strategy for that location.
3. Inspection of Potential Investments Is Easier
In real estate investing, conducting a home inspection to check for any hidden issues is critical. This will determine if investing in the property is a good opportunity or not. It is easier to conduct an inspection on houses for sale near me as compared to out-of-state rental properties. There is no need to travel long distances and better yet, you won’t be forced to rely solely on pictures to know what you’re getting.
4. Easier Property Management
Investing in houses for rent near me makes property management easier. If you are close enough and have the time, you can even do it yourself. You can conveniently visit your investment property and even personally select your tenants. This will help you reduce your rental property costs. With long distance real estate investing, you may need to hire professional property management.
Disadvantages of Investing in Houses for Rent Near Me
1. Limited Options
Not all homes for sale near me are good investments. Therefore, by only investing in local properties, available options are automatically limited. You can likely find better, cheaper, and more profitable investment properties in out-of-state markets.
2. Emotional Attachments
Investing in houses for rent near me can lead to emotional attachments. This may be a result of constantly visiting the investment property, the amount of effort put in and getting to know your tenants personally. All of this can cause a real estate investor to make critical decisions based on emotions instead of logic.
How to Know Whether to Invest in Houses for Rent Near Me
Houses for rent near me have both advantages and disadvantages. There are times when they could be more profitable while some other times they may not be lucrative. To determine whether to invest in houses for rent near me, the following should be done:
1. Real Estate Market Analysis
You may be more familiar with your local housing market because you live there. However, it is still not enough if you have yet to actually invest in it. Performing a real estate market analysis will help you to understand the current situation of the local housing market. You will be able to know whether it is a seller’s market or a buyer’s market. And analyzing factors like return on investment, job market, and appreciation rate will help you know if the location is lucrative.
2. Neighborhood Analysis
After determining the performance of the entire housing market, conducting a neighborhood analysis will help you find lucrative neighborhoods that are in line with your rental strategy. Some neighborhoods in that real estate market may not be good for investment. Neighborhood analysis will help you filter out bad neighborhoods and narrow down your search.
3. Investment Property Analysis
The final step in determining whether to invest in houses for rent near me is to conduct investment property analysis. This is a very important step when searching for an investment property in every market. It ensures that the rental property chosen will yield a good return on investment.
Investment property analysis can be easily and quickly performed using a rental property calculator. This real estate investing tool helps in the calculation of profitability measures such as the cash on cash return, cap rate, cash flow, and rental income.
Mashvisor’s investment property calculator is among the best in the market. It will help you analyze and find the best investment properties across the United States. Sign up now to check this real estate investment tool out for yourself.
Selecting the right location is very important in real estate investing. However, choosing between investing in houses for rent near me or out-of-state houses can be hard. Regardless of the many benefits that may come with investing in houses for rent near me, it’s not always the best decision. It will depend on a number of factors such as the performance of the rental properties, the neighborhood, and the local housing market. There are some analyses that you can perform to make a good decision. Conducting these analyses before purchasing a rental property is important regardless of whether it is a far or near market.