I know I am going to get some comments from readers in other parts of the country that you should buy investment property in their state! My point is not that anywhere BUT Minnesota is bad. It is just that I often get the question from new investors that ask: “I read investment property in [insert any state here] is a great buy, should jump in?”. My answer is always NO.
Buying and owning investment properties take time and work. Obviously, how much work is dependent upon how many properties you have, their age and condition, and even the type (single family versus multi-family). In the end, there is some time and work required to own investment property. Owning property in another state is probably 10 times more work and I would argue not as great of a buy as you have been told.
- When you buy investment property, you should be familiar with the market and even the neighborhood you are buying in. How familiar are you with that out-of-state neighborhood?
- You will need to find a Realtor and potentially a new mortgage broker. Where will you find them?
- How are you going to show the property to potential tenants?
- Who will fix anything that needs repair?
- Who will you call in an emergency at the property?
- Can you get to the property at least quarterly to check on the tenants and condition?
The only answer to owning out-of-state is to use a management company, but that is not an excuse to simply forget about the property:
- They will typically charge 7-15% of your monthly rent and then charge 1 month of rent to find a new tenant. Is that factored into your cash flow equation of this “great buy“?
- Even with a management company, you should plan to check on your property at least every quarter to make sure the management company is keeping the property maintained and the tenants are not destroying the place.
- If the property becomes vacant, how do you gauge how hard your management company is working to get your property filled?
Lastly, there are plenty of amazing investment properties for sale in Minnesota. Whether you want to do a flip, a short-term hold, or a long-term hold, we have all the “great buys” you would ever need, right here.