Looking to buy rental property out of state

[Jim L.]

Good morning everyone. I am fairly new to the community, and have been definitely stuck over analyzing instead of acting. Between the interest rates and cost of houses, I have been very hesitant to pull the trigger, especially me living in NY on Long Island where the cost is insanely high. I have kind of pivoted to looking for a location I am looking to retire ( somewhere in Tennessee by some water source ) and want to buy it to rent for the time being. Can anyone point me in the right direction as far as finding accurate rental comps? I've heard getting at least 1% of purchase price but know it isn't always as simple and straight forward as that. Also this is very daunting to me being my first rental property and it is so far away from where I live. Any long distance rental advise would be greatly appreciated.

[Allen Tackett]

Hey Jim, great questions.  I can relate as the current market is expensive and high interest rates def don't help the numbers.  

To answer your question about comps: I use Zillow as my initial screen.  I use it in two ways.  First, I look at the rental Zestimate.  Second, I change my search to "To Rent" instead of "To Buy" and I look at what is actually on the market that is comparable.  I ask myself, if I were a renter, which property would I try to live in?  I think the key is to try to put yourself in your prospective tenant's shoes.  How can you add value to them?  Do you accept pets that apartment buildings won't?  Do you have more space?  Nicer finishes?  You get the idea.  I treat each one of my properties as a business and my tenants as my customers and I try to give them white-glove service.  After I have an idea of comps from Zillow, if I'm serious about the property and think it might work and I'm about to make an offer, I usually look at homes for rent on a few other sites.  Sometimes, if I don't feel confident in the data I've found, I'll call a property management company.  That's time consuming though if you're trying to screen 50 prospective properties, so I usually only do that for my top 1-2 picks.  Lastly, ask your realtor for their assessment.  I've found that Zillow and my realtors are almost always lower than what the market will actually pay.

As for where to retire and be close to water, Tennessee and Alabama have low taxes and lots of growth, so those would seem to be excellent options.  Regrettably, I don't have the perfect city or lake for you, but if you find it, please let me know!!  I'll come be your neighbor in a few years :)