Investing In Property Out Of State
Published on Tuesday, 10 April 2012 23:02 Written by Amy Fontinelle
Buying and owning property is rarely easy or simple. When the property in question is in a distant location, the challenges multiply. Investing in out of state property might seem appealing if you live in an area where real estate is expensive. It might also appear attractive if you already own property where you live and you want to diversify your holdings. Or you may just want to own a vacation home. But before you make an offer, carefully consider these issues.
Reasons to Buy
One factor that leads people to consider buying property far from home is that property may be more affordable in another state. Perhaps you live in an area like San Francisco or New York City, where property costs are sky high. If you simply can't afford to buy a place where you live or if doing so would require investing the majority of your money in real estate and you'd rather diversify your investments, you may want to look at other cities where market fundamentals are sound but property costs are significantly lower.
People who live in depressed areas but don't want to move for work or personal reasons may be better off renting in their hometown and investing in real estate where the economy is stronger. For example, if you lived in Las Vegas, the city with the highest foreclosure rate during the housing bust, you might have wanted to buy property in a market where median sales prices remained relatively stable, like Charlotte, North Carolina.
Perhaps the main reason people decide to invest in property out of state is that the return on investment (ROI) may be better there than it is at home. Purchase prices, appreciation rates, mortgage expenses (if any), taxes, housing regulations, rental market conditions and more are all factors that might be more favorable in another state and will contribute to a property's potential ROI.
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