Author Topic: Buying/Renting Out House In Another City  (Read 1248 times)

Timodeus

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Buying/Renting Out House In Another City
« on: August 14, 2017, 02:17:00 PM »
So, I don't know how common this situation is in this community but a little backstory (sorry for any confusing details). I've worked for a Fortune 500 company for the past 6 years, starting shortly after graduating college and have rented the entire time because I knew I would (and had a desire to) move after just a few years. Instead I rented cheap apartments close to the office and plowed the savings into index funds. The company is headquartered in Oklahoma, where I am from and where I originally started working. In those 6 years I've moved twice, to Pennsylvania and Texas. I live in Houston now. I like the company, it's a decently paid job but I'm only pulling in a mid to high 5 figures, sometimes more with bonus. My long term FIRE plan is to retire and move back home where all my family is. This is currently 7 to 9 years away, perhaps less depending on a whole host of factors. My boss is steering me into a future management position in the department and knows I eventually want to move back home where the company is headquartered, so there is the possibility I will move within the next 5 years anyway. I moved to Texas recently ostensibly to become acquainted with the processes and personnel here at this office (our second largest location outside HQ).

For the next few years (most likely 3 to 4), I am located here in Houston where I rent an apartment close to work (just started biking!). My wife and I just had our first child and we have both been getting the desire to set down roots and find a more permanent place of residence. Since I've never bought property, I've been researching the process and looking at listings close to me since I can't fathom the commute from the suburbs, anyone who's been in Houston will know why. All of the affordable listings seem very overvalued, though perhaps that is because I am such a novice at analyzing them. My conclusion is reinforced by the BH&J Buy vs. Rent Index:https://business.fau.edu/departments/finance/real-estate-initiative/bhj-buy-vs-rent-index/bhj-data-and-graphs/#H-TX which shows Houston as a better city to rent. Given the prices for real estate here, the likely time spent here (3 to 4 years), and the genuine desire not to stay, my wife and I are heavily leaning toward staying put renting for the time being.

All this backstory brings me to my actual question and topic: is it feasible or advisable to buy a house in another city (while currently renting) for the purpose of renting it out and the more distant future purpose of living in it? I got the idea while looking at properties and comparing the two locations (Texas and Oklahoma). My hometown in Oklahoma has significantly cheaper property and better rent to value ratios (roughly 1% value of house a month in rent) than my area of Houston. I know the neighborhoods back home even better than the ones I'm living in now and do regularly travel there for work and family reasons. Not having to search and find a place when we do eventually move back will be a big plus. There are some big cons I have come up with but hope anyone who may have faced a similar situation will comment.

srad

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Re: Buying/Renting Out House In Another City
« Reply #1 on: August 14, 2017, 03:15:08 PM »
Buying rentals in other cities is a strategy investors use.  Oklahoma is a state that has very favorable rent to value metrics.  You could look for Turn Key operators in the area.  They buy ugly homes, fix them up, rent them and manage them.  A good turn key operator is the key. Since you are from OK you also have a leg up on other outside investors, you know the area so you will know if the turn key provider is full of sh1t.  You could also just do this your self, buy a fixed up home and manage it yourself.  More work for you yes, but more money...  There's lots of websites out there that help enable long distance self managing.  Having family/friends in the area (whom you can trust) is a huge plus.  I've got some properties an hour and a half away from me, but my parents live just 10 minutes from them.  So if there's something quick i need done, like open a door for a contractor to get a bid, they'll just swing on by (they are retired and love to help us out:).   If i were to do Turn Keys, which i have been seriously considering.  I would not manage them myself, since i wouldn't have any contacts in the area to use.  And btw - OKC is a city i am considering...

Timodeus

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Re: Buying/Renting Out House In Another City
« Reply #2 on: August 16, 2017, 06:46:19 AM »
Thanks for the reply, I will look into turn key properties. Having relatives around to check on the property is something I look at as a benefit as well, my father has already volunteered.

I lived for a short time in OKC and my step-brother still has a rental house there (he lives out of state as well, which is giving me motivation).