When you are making a large purchase, such as a home or a car, most experts agree that it would be absurd to do so without looking it over yourself or hiring it done to make sure you are getting what you are paying for. If you are buying a home specifically, there is usually an inspection done which protects you from getting stuck with a huge problem such as structural issues or termites that could cost you thousands. But if you are buying a house as a rental property rather than as your primary dwelling, would you do things differently? Should you ever buy rental property sight unseen?
In the past, the answer to this question may have been absolutely not. However, times are changing, and although there are definite disadvantages to buying a property sight unseen, there are actually advantages as well.
Location – If you are purchasing a rental property in an area different from where you live, signing contracts, collecting rent, and checking on your property will be much harder. Being an absentee landlord makes conducting business harder. In addition, how do you know you are buying property that isn’t a dump?
Repairs – When repairs need to be made to keep your rental up to par, you need to be able to get them done quickly but you also need the work to be of good quality. One way to do that as a property owner is to build a good relationship with your repair businesses. Doing this is much more difficult from another location. If you haven’t seen the damage, how do you know there actually is damage or the extent of it? You could be getting charged for repairs that are not really being done.
Decreased Profits – Depending on the location of the rental property you are considering, it might be wise to hire a property manager, especially when buying sight unseen. This person or company can assist with paperwork, repairs, and collecting rent payments. Of course, this will cut into your profit margin as well.
Bigger Market – Being able to shop around for rental properties in a larger market is one possible advantage to buying a property sight unseen. When you are looking for properties in your area alone, there are only so many in your price range that will fit your needs as a rental. However, when you are able to look in multiple cities and locations, it opens up a whole new world of possibilities.
Potential Investment Increase – The value of your rental property investment should increase over time allowing you to sell it for a profit if you should choose to do so in the future. The potential for increase can be higher for different locations, such as areas where your rental has a view. But the market can be different in different locations. Therefore, being open to purchasing rental properties in different locations sight unseen can be an advantage in this way.
Mobility – When you buy rental property in an area different from where you live and sight unseen, you have no emotional attachment and you can move if you choose without worry of having to liquidate all of your rental properties.
As you can see, there is a greater potential to increase your investment when you buy rental property sight unseen. Just beware of the pitfalls and dangers to ensure you are making a wise decision.
Do you think you should ever buy rental property sight unseen?
Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.
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