How far is too far away to own rental properties?

25 Replies

Hi everyone, I am new to this game and my wife and I were looking to buy our first buy and hold residential property in the next year or so. As we have been educating ourselves, it has become clear that as a best practice, you should live near the area that you own properties. It sounds like this is especially true if you are a newbie. So the question is, how far is too far? How often will a land lord need to be at a property once it is past rehab and is fully rented? I am looking at living in Asheville, NC and properties in Asheville may not be as good an investment as they will be in a number of neighboring communities. Charlotte is about 2 hours away and has an abundance of deals that would cash flow. Is that too far? I know that there will be a lot of perspectives and that there is no "right answer" but any feedback from experienced investors would help provide some much needed perspective. Thanks!

When my wife and I started we had about three distance rules.
1. Close like on our street, neighborhood or a multi family you live in.  Not for us.  This could also be the rental type ie tenant that you have to collect the check in person.
2. 20 minutes or so away, this is what we chose.  We managed the properties and at about 20 minutes it was easy to get to but we didn't expect the tenant to knock on our door.  It's worked pretty well.  These are rentals at a price and neighborhood where the tenants are used to mailing a check on time.
3. An hour or more away I expected to have a PM and we do.  They are actually more than an hour.  Tough to respond 2 hours away.

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For me I restrict myself to one city and it's approximately 20 minutes away from where I live and that seems to be a struggle for me at times. For the first time I think you should keep it close. But at the end of the day you have to go where the deals are.

Do you want to be a local landlord or a remote landlord?  I know there are people that invest out of state; I work with many of them -- they buy properties they have never seen and we get them rehabbed and rented out.  Property managers can do the actual tenant interaction.

How often you'll be at the property depends on the quality of rental and tenants really.  Too far is subjective really.  Do you want to be on the road for 4 hours (round trip) if the AC goes out and you need to slap some window units in it until the AC man can get out the following Monday?  Do you want to drive 4 hours again to remove them?

May not be that often, but driving 4 hours once would be one time too many personally.  My rentals are both ~2 miles away.  I honestly couldn't imagine even driving 30 minutes to and from now.

Originally posted by @Justin Fox :

How often you'll be at the property depends on the quality of rental and tenants really.  Too far is subjective really.  Do you want to be on the road for 4 hours (round trip) if the AC goes out and you need to slap some window units in it until the AC man can get out the following Monday?  Do you want to drive 4 hours again to remove them?

May not be that often, but driving 4 hours once would be one time too many personally.  My rentals are both ~2 miles away.  I honestly couldn't imagine even driving 30 minutes to and from now.

Hey Justin 5 miles is 20 minutes in some areas.  You know that place you can't to from here.  Grin.  They just put a toll road in that makes ours 10 minutes closer.  Good for us.

If you are going to self manage I would keep them fairly close. No further than you would be willing to commute to work. Otherwise plan to use a property manager in which case there really is no distance restrictions. There was a wholesaler on one of the podcasts that said the sweet spot for targeting "tired landlords" was those that were 1 to 3 hours away. These were the guys that thought they could manage themselves and didn't budget for a PM and now were highly motivated to just get out. Food for thought.

@William Morrison

It takes me about 3 minutes to get to either of my properties right now.  I can imagine having a rental in Houston and it taking 25 minutes to get to the end of the street lol.  Closer the better.  If they come knocking, I'll turn the lights off and tell everyone to shush haha.  

Originally posted by @Justin Fox :

@William Morrison

It takes me about 3 minutes to get to either of my properties right now.  I can imagine having a rental in Houston and it taking 25 minutes to get to the end of the street lol.  Closer the better.  If they come knocking, I'll turn the lights off and tell everyone to shush haha.  

 I love it.  Like Halloween night when you got home late from work and forgot to buy candy, just turn the lights out.  Let me know how that shush works.  More Grins

We're an hour and a half but it is doable. It doesn't hurt that it is somewhere I would want to visit anyway.   Sometimes it is a challenge but then sometimes anything is a challenge.  You have to figure also if you are flexible or not.  If you have a little leeway in your day job or the ability to go once and a while to check the property then I don't see an issue.  One downside is when your tenants are needy or not so bright and can't explain the problem then distance can be an issue. You hate to send someone to fix the heat to find out the tenant doesn't know how to change the battery on the thermostat.... but that is the risk you take.  it is only for the smaller stuff you go yourself ,  if the heat is out you send the furnace repair guy.

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Originally posted by @Casey Nordendale :

Hi everyone, I am new to this game and my wife and I were looking to buy our first buy and hold residential property in the next year or so. As we have been educating ourselves, it has become clear that as a best practice, you should live near the area that you own properties. It sounds like this is especially true if you are a newbie. So the question is, how far is too far? How often will a land lord need to be at a property once it is past rehab and is fully rented? I am looking at living in Asheville, NC and properties in Asheville may not be as good an investment as they will be in a number of neighboring communities. Charlotte is about 2 hours away and has an abundance of deals that would cash flow. Is that too far? I know that there will be a lot of perspectives and that there is no "right answer" but any feedback from experienced investors would help provide some much needed perspective. Thanks!

A lot has to do with are these going to be self management. Or will you hire another company handle the rentals. At one point in time I was in 4 different states. Buying , selling , holding properties. So it really depends on the teams you are building. For me now I am building turn key rentals ( for one company ) in both NC and SC.

They are more concerned with the management companies in each market we build in over distance for their clients.

Alex

Buying close to home is not JUST about how often you will need to go to the property when it is rented; it is also about how familiar you are with the market; it is also about your ability to actively search for a good deal (and recognize one if you see it); it is also about avoiding purchasing something that will be high risk and lose money; it is also about your ability to build your professional network in that market; it is also about your ability to manage any renovations needed before you rent it; it is also about your ability to respond to and assess any serious problems that come up; it is also about your ability to make a unit ready between tenants ... I could go on and on.

I would also add that you can make money in any REI market in the USA if you are local and know what you are doing, so why not make it close to home? Don't buy that the grass is greener on the other side of the fence. Picking an investment market based strictly on estimated immediate cash flow is foolish IMHO.

My closest property is 2200 miles away from me! It's 1000% about the team you have in place to manage the property(ies). That's all that matters. Good team = it totally works.

Are you hiring a property manager or managing yourself? I know the BP folks generally say try to invest within 2 hours of where you live. However, I think that comes with a lot of asterisks including your comfort level. Is this your full-time job? Do you have people in place that can handle an emergency? How 'hands-on' do you want to be during reno projects? 

I think it's ok to do (I'm in NY and have a rental in Charlotte and want to add more), so obviously I think it's possible but I have friends in the area and my current rental is in an A class area and I am still friends with the neighbors. We shall see how additional rentals hold up!

Look up Bigger Pockets Podcast show 155 with Sharad Mehta. The guy has a huge portfolio of SFH's (50) all out of state (48 free and clear!). About halfway through the show he talks about how moving away from his market has helped his business grow because it has forced him to learn to delegate and use technology.

Obviously I think it depends on how big you want to scale your business and what your personal goals are as far as your role in your business. Do you want to deal with tenants or do you want to deal with a property manager?

Hope that helps

I live in WA with a rental I have in GA (thanks to the bubble bursting shortly after we bought it) that I haven't seen in person in over 7 years. And I'll echo what a couple others have said ... it's definitely possible to hold properties that are however far away, as long as you have a strong team you can trust and depend on. We have a PM, but I also have built relationships with other professionals (landscaper, flooring guy, HVAC guy, painter, handman, etc.) in the area because I'm more comfortable with the vendors and contractors that I have had complete work on the house before.

If doing everything yourself, I'd imagine that "how far is too far" is really only a function of your own tolerances. 

I've rented over 100 single family houses(stopped counting) for my RE Mentor.  If you're new and never purchased a property. I think its a good idea to self manage you are going to learn a ton more by doing so.  You will also learn how you want your properties managed. So you will be better equipped to hire a manager further down the road.  

So if you go to Charlotte which is 2 hours away, keep in mind, you make a bad tenant decision you are in court and filing the docs and going to court you will either have to stay in Charlotte the night before at a hotel, or wake up really early if you have court in the morning.  Not to mention every-time you want to look at houses and pay contractors and see the work they are doing on your rehabs, every time you need bids for work etc.  Unless you are a contractor or have been at one time don't do the work yourselves, especially at that distance.  Just my opinion.  

 I guess the better questions are what types of properties are you buying, are you buying turnkey, are you buying in lower income, middle income or higher end properties.  Each type has their own separate challenges and you will need to plan ahead and put capital reserves aside for those challenges.  

@Casey Nordendale I have been in Asheville more than once and it seems like a great community to own rental properties. Some people buy far away to chase great cash flow, but I am a firm believer there are always good options close by. You know your own area best. Who knows what the heck is on 2000 miles away. I can drive by and see my investment to check up on it. Nobody you hire will ever care as much about your properties as you do. Mine are all a 5-10 minute drive. Anything over 15 minutes is too far for me. Added benefit is I self manage and save thousands of dollars.

Depends on your team and tolerance for risk. If you have someone (agent, family, friends) on the ground that can facetime a property for you, and you hire a property manager, you should be able to invest from just about anywhere. 

I'll ditto the caveats on distance investing and management. Unless you have someone on the ground you really trust who is committed to doing projects to completion, it could be a nightmare.  Also agree with local beta helping to find good deals.  Some places that look great on paper turn out to have weird local issues that make them hard to rent or maintain. I invest in Asheville because I live here- but according to stats on ratios of rents to purchase price, and corroborated by my own experience, there's more money to be made (by virtue of lower purchase prices and more distressed sellers) anywhere but Asheville. With that said, the hope of continued market gains here is pretty exciting- although we may have already realized a big chunk of that potential just in the past six months. 

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