Investing in Rental Property Where You Don't Live...But Hopefully Will One Day
by Lisa Wells

I began my rental property business five years ago, slowly buying low-maintenance property in easy-to-rent areas around Atlanta, such as condos in the Virginia Highlands neighborhood and a townhouse on Lake Lanier. I focused on buying property close to where I live mainly because I wanted to handle maintenance issues quickly and easily, and keep tabs on my property while I had renters in it. Then real life set in, and my "full-time" job forced me to commute to Manhattan every week for six months. Instantly, the convenience factor of having local rentals disappeared due to my travel schedule.

While sitting on a tarmac in White Plains, NY, coaching a renter through their Argentine ant infestation via cell phone, it occurred to me that I could own rentals anywhere my cell phone would dial and the landlord management hassles would be relatively the same.

If You Could Live Anywhere, Where Would It Be?

How many times have you wondered where you would live if you had unlimited funds and no other reasons to stay where you are now?

For me, the choice is simple: Salt Lake City. I'm a notorious skier (note that I did NOT say notoriously good), and there are few ski resorts in the world that can compete with the runs, the snow and the fantastic people at Alta or Snowbird - better yet, both are located within 45 minutes of the airport.  So, if I was independently wealthy, I'd live on the lake in Atlanta during the summer, and spend my winters falling down the Utah mountains. 

Great Idea, Lisa, Now What? I Want to Buy Rental Property In My Favorite Place Too.

Reality check: I'm not independently wealthy...yet.  However, that doesn't mean I can't use my rental property to reach my goal of owning houses on both sides of the country.

I prefer to own condos and townhouses because as a single woman, you aren't likely to catch me out mowing the lawn or shingling roofs of the houses I own (although I'm not above doing it). A quick search of the Salt Lake City MLS showed that surprisingly, I could own a condo in Sandy, Utah for less than my average purchase price in Atlanta. The good news is Sandy is only a hop, skip and a facebust away from my favorite ski runs!

For the same or less money than I would spend on Atlanta condos, I can snag a rental house in a Salt Lake City suburb and let a good-natured renter cover my mortgage costs for a few years until 1. the property is paid off or 2. I decide to give up the lake and move there full-time.  Both options get me one step closer to owning property in my dream locale.

So what else should I consider before dialing up a Salt Lake City realtor?

Financing Differences

If you've expanded your rental property portfolio by living first in the house and then renting it out, your mortgage options are obviously going to be different, as you'll need an investor loan if this is not your primary residence.  The interest rates for investor loans are typically higher, and the tax advantages are lower, but the overall mortgage cost might make sense for your situation if you are essentially funding a retirement or vacation home through the rental ownership. Look at it this way - up to 80% of your monthly costs on this property could be borne by a renter, and after the mortgage is paid off, you end up holding the deed to a place of your dreams.

Maintenance Issues

Stopping by to change the air filters on the weekend probably isn't going to happen that often if you buy rentals on the other side of the country from where you live, but you can easily find a property management company through a variety of online resources such as http://www.allpropertymanagement.com/ or a local handyman through http://www.craigslist.com/.

[Editor's Note: Be sure to properly screen anyone that you entrust with your property repairs and maintenance through online background checks and review them with your local Better Business Bureau. Also get references from other clients...and check them!]

However, if you do make a trip to your rental property for maintenance purposes, the cost of the trip as well as the supplies and labor costs may be tax-deductible.

Let Your Rental Property Fund Your Dreams

Some people are inherently risk-adverse, and will never be comfortable with owning property they can't get to relatively quickly. I'm not one of those people, and the millions of time-share owners out there probably aren't either. Owning rental property, regardless of where it's located, can pave the way to your dream of having more than one home for retirement or vacation purposes, or assets that you can cash out when the time is right.

If you're considering rental property investment, keep your long-term goals in mind and how your investments can help you achieve them.

If you're a realtor, feel free to share this article with your prospective clients to inspire their dreams as well.

Look out, Salt Lake, here I come!

Additional Resources - Landlord2Landlord offers a list of helpful resources at http://www.landlord2landlord.com/HelpfulLinks.aspx.that may be of further use to you, including links to the American Association of Small Property Owners, a variety of home improvement contractors and service providers, and a resource for Real Estate Forms for all 50 States (http://www.legalhomeforms.com%20/).

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As always, information in this article is not intended to be used, and should not be used, as legal, tax or accounting advice. Investors should seek advice from an independent financial advisor about their specific situation.

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