Investing in real estate property
Considering the property location of an investment
While location is still important in selecting investment real estate, it is not critical as the location for your home. Your primary concern is in finding a real estate investment that meets your investment needs and goals. There are out-of-state investors who never see the property they purchase. They invest based on the financial performance of the investment. Needless to say, these investors are not intimidated by the location of the property.This brings up the question: how far away should your investment property be?
How far away from your residence should your property be located? There are two parts to this answer. When you purchase a rental apartment building close to your home, you can be certain that some of your tenants will find it convenient to stop by on a regular basis and complain. Some investors hire a resident manager and he is the only one who knows the owner's name and address. There is one such investor who actually lives in his own apartment building but the only one who knows that he owns the building is his manager.
There is another thing to be said about living too close to your investment. Your property will probably go on for years with few, if any, problems, but if you are in a position to see it regulary, you will undoubtedly see things going on that you don't like. These are not major problems that will affect the appearance of the building or the peace of the tenants, but unimportant things that have no effect on the security or operation of the property.
What about the other extreme? How far away can you live from your investment? This depends on three factors: the size of the investment, the type of investment and the amount of management you have. Since they are all intertwined, they should be looked upon together.
A small property being managed by you should be close enough to make it convenient for you to visit the building to show vacant apartments or attend to problems. You do not want to drive for an hour each time you have a prospective tenant who wants to see an apartment. Employing a resident manager to handle these problems will allow you to increase this distance.
If your investment is a large one, where resident management handles everything, you can live in a different city or state if you wish. The same holds tru for easy to manage properties such as sale/leaseback or even small investments with one or two tenants on long-term net leases. In case you have forgotten, if the lease is a "net" lease to the landlord, the tenant is responsible for all the operating expenses and repairs.
Many investors, owning fully managed larger properties, never see them. They live out of state, even out of the country, and rely on the management team to handle their investments. And why shouldn't they? Their property managers are probably more qualified to manage the property that the investor himself. You do not live in Detroit simply because you own General Motors stock and you need to look at their buildings on a regular basis.