Investing in cash-flow real estate is an excellent way to build wealth. However, many investors find themselves in a situation for one reason or another where they cannot purchase cash-flowing real estate in their local market. If you find yourself in this situation, your only option may be to purchase property in another market, and this can present several challenges. Purchasing real estate outside of your local area can be done successfully, and if you pay attention to the things below, you will increase your chances of success dramatically.
Find the Right Location
When it comes to real estate, you have probably heard of the first three rules: Location, Location, Location! Abdo Romeo The location of the property is probably one of the most important factors you can choose. When considering cash-flow investment properties, you should be looking for working class neighborhoods that have well cared for homes. These are the best locations to invest in because these neighborhoods have a higher demand for rentals, and they are more reasonably priced creating potential for higher returns.
An old joke with real estate investors is that the definition of a tenant is “a plaintiff”. Of course it is not true that you will get sued by every tenant, however, the point is that there is a high likelihood that you could get sued while investing in real estate. Therefore you need to protect your liability, and there are several strategies that you can and should implement to protect your liability. These strategies normally include how you setup your entity structure and the insurance you have for your properties. Before making any decisions about your entity structure or insurance you really should discuss them with a real estate attorney.
Set Your Business up Right
To make the most out of your investment you need to have your business structure and taxation setup properly. There are many opportunities for tax planning while investing in real estate, and making the proper plans can save you a lot in taxes. Everybody’s situation may be slightly different, and therefore you should discuss your real estate investment goals with a CPA experienced in working with real estate investors.
Find the Right People
To invest in property outside of your area, one of the most critical things to do is to find the right people to invest with. At a minimum, you will need a real estate agent, a property manager, a general contractor, a CPA, and an attorney. Finding all of these professionals in the market you are looking to invest in can be a very difficult task, however there is an alternative. Rather than try to find all of these professionals yourself, you can decide to work with a company that specializes in putting together turnkey investment properties. The advantage to doing this is that you will be working with a company that has already established all of these contacts, and they will have a very good idea about the real estate market they work out of.
Michigan Turnkey is an example of one such company that provides turnkey rental properties for investors around the globe. They use a system that incorporates all of the elements discussed above to find the right location, the right property, and the right tenants. Additionally, they can help you get your business structure set up to provide you wit the proper liability protection and maximize your tax benefits. Working with a company like Michigan Turnkey can eliminate many of the hurdles you will face as a remote investor and will increase your chances of success dramatically.