Selecting the right rental property is very important in real estate investing. Some people, especially beginner real estate investors, may be interested in buying a rental near them while others may prefer one far away from their homes. However, are rental properties near me good for real estate investing? Before deciding whether buying rental properties near me is a good or bad choice, a close study of the two options is vital. Let us look at some of the advantages and disadvantages of both options.
Advantages of Rental Properties Near Me
Even though certain benefits will depend on that particular real estate market, rental properties near me have some general advantages. Here are some of these benefits:
Real Estate Investment Network
Beginner real estate investors will often ask themselves, “Who do I know that can offer me help in investing in rental properties near me?” This is because it is highly probable that you have contacts and personal relationships in your local real estate market that can be helpful to you in your real estate investing. Building a real estate network is more difficult for out-of-state rental properties, making the search for the best real estate investments harder.
If you already know someone who has purchased rental property locally, such a person can be helpful to you in a number of ways. They can provide you with the contacts of a real estate agent or other professionals that they have worked with in the past or leads to other rental properties for sale near you. Local contacts can also help a real estate investor to find tenants much quicker.
You Are Familiar with the Real Estate Market
Good understanding of the real estate market is vital when buying an investment property. A real estate investor needs to thoroughly search the location to ensure that the investment property being sold is lucrative. This will enable them to select the best type of investment property and investment strategy for that particular location. If you live in a certain real estate market, you are more likely to have enough knowledge on how real estate investing there is influenced, such as the state of the economy in that market. Such information is important since it will determine how successful the real estate investment will be. However, you can gain more knowledge on your local real estate market by using tools such as an investment property calculator. You can make use of Mashvisor’s investment property calculator to learn about investment properties in your region.
Cheaper Real Estate Investment Loans
Loans for real estate investment are often less costly when the real estate property is close to where you live. Mortgage lenders usually consider out-of-state rental properties to be riskier. This makes fees like down payments, insurance, and mortgage interests more expensive.
Easier Home Inspection
Buying rental properties near me will make home inspection and property management easier. In real estate investing, performing a home inspection is critical for all real estate markets. Real estate investors should be able to walk through the rental property by themselves to see if they have any issues. This will enable them to decide whether to invest in the property or not. Houses for sale near me will make a home inspection easier than when the houses are far away.
Easier Property Management
Rental properties near me are also desirable due to the property management factor. Investing in real estate near you makes it possible for you to do the rental property management by yourself with no need for extra travel expenses. For instance, the real estate investor can even do some repairs him/herself instead of hiring an expert. This reduces the rental property costs. With long distance real estate investing, however, real estate investors may need to employ professional property management.
Related: The Pros and Cons of Professional Property Management
Disadvantages of Rental Properties Near Me
Making investments in rental properties near me has some disadvantages too. The main disadvantage is having limited options. Not all investment properties close to your area of residence are good investments. It is possible to find more affordable and better rental properties in out-of-state real estate markets with a higher return on investment.
How to Determine Whether to Invest in Rental Properties Near Me
Are rental properties near me good for real estate investing? This real estate question doesn’t have a wrong or right answer. There are times when rental properties for sale near you could be more lucrative while sometimes they may be a bad investment decision. A real estate investor should do the following to know whether to invest in rental properties near them.
Real Estate Market Analysis
After finding rental properties near me, the next step I should take is to perform a real estate market analysis. Even though you may have some information on your local real estate market, it is not enough if you don’t have experience investing in it. You ought to perform a real estate market analysis to understand the current situation of the local housing market before you decide to purchase an investment property. It will help you understand if that location is ideal for real estate investing through analysis of factors such as the job market, appreciation rate, demand, return on investment, etc.
Related: Real Estate Market Analysis in 6 Simple Steps
While a real estate market analysis is conducted to determine the performance of the whole housing market, a neighborhood analysis will help the property investor to narrow down the search and weed out neighborhoods that are bad. This is because not all neighborhoods in that market may be good to purchase rental property. Neighborhood analysis will also enable you to know which neighborhood is best for your specific rental strategy.
Investment Property Analysis
After performing real estate analysis and neighborhood analysis and determining that both your local housing market and neighborhood match your rental strategy and are profitable, the final thing to do is to perform an investment property analysis. This analysis will help property investors to ensure that the rental property will yield a decent return on investment. This analysis can be performed with a rental property calculator.
Related: The Beginner’s Guide to Rental Property Analysis
Deciding whether to invest in rental properties near me may be quite hard. Rental properties near me have both advantages and disadvantages. To make a smart decision before the purchase, there are some analyses that can be performed in the local real estate market, the neighborhood as well as on the rental properties. Mashvisor provides you with the necessary tools to analyze investment properties and help you make good investment decisions.