It is tough to buy rental properties in California with it laws and rules.
If you do want to own rental properties, should you buy rental properties out of state?
Problems with buying rental properties out of state
- Distance: It can be challenging to manage a rental property from a distance, especially if you are unfamiliar with the area and market conditions.
- Finding tenants: Locally-based property managers often have the best connections when it comes to finding reliable tenants.
Out-of-state landlords may not be as familiar with the local rental market, and may struggle to attract quality tenants.
- Laws: Every state has its own laws and regulations that must be followed, which can be challenging to sort through for an out-of-state investor.
- Property maintenance: Keeping up with maintenance and repairs can be difficult for out-of-state investors, since they can’t be on site to address issues as quickly as a local property manager.
- Unexpected costs: Investing in a rental property out of state can be expensive, since unexpected costs can add up quickly with travel and other expenses.
There can be tax benefits to owning out of state rentals
There can be tax benefits to owning out-of-state rental properties, depending on the laws of your state and the tax rules of the state in which the property is located.
Generally, any income earned from rental activity is taxable in the state in which the property is located.
If your state has a lower income tax rate than the state in which the property is located, you may be able to take advantage of those lower tax rates when filing your taxes.
Additionally, if the state in which the property is located has lower property taxes than your own, you may also be able to benefit from those reduced costs.
If you are thinking of buying rental properties, check out the local real estate market first before looking outside your area.
The further out you go from where you are living the more you will depend on people and management companies in the area you are looking to own that rental property in.
Steve Olmos
Selling real estate in Southern California since 1980
Steve Olmos: www.steveolmos.com
Homequest Real Estate
Diana Olmos: www.mortgagemarketingmentor.com
Statewide funding Inc.
You must be logged in to post a comment.