Brainstorm - Buying Real Estate in Your Hometown

I have been kicking this half-baked idea around for awhile.

As I suspect is the case with many you, I no longer live in my hometown. I live a few hours away and go visit my family and friends in my hometown several times a year.

I am always interested in finding real estate investment opportunities. Unfortunately, these days it seems nearly impossible to find a real estate investment that has an acceptable rate of return.

I have often wondered (usually during the trips to my hometown and back) if I could couple these trips with an investment in real estate to enhance my total return to an acceptable level.

For example, if I owned a rental property in my hometown, I believe any travel expenses to and from my hometown (with the primary purpose of working on the rental property) would be deductible from my rental income. My understanding is these expenses include transportation including airfare or car mileage (40.5cents/mi), lodging, and meals.

Lets say I head to my hometown an average of 8 times a year to primarily work on my rental property and spend $100 during each trip (lodging would be free because I would stay with family/friends).

	Miles	Mileage Rate	Food	Amt. Deductible
1 trip	400	$ 0.405	$ 100.00	$ 262.00
4 trips	1600	$ 0.405	$ 400.00	$ 1,048.00
8 trips	3200	$ 0.405	$ 800.00	$ 2,096.00

Assuming a 25% federal tax rate and 8% state income tax rate then this would in effect be a $2096.00 x 0.33 = $691.69 or ~ $700 tax credit.

Now what if your hometown was on the other side of the US. Expenses to travel to a rental property would be even more significant in this case from larger airfare and rental car expenses.
Airfare estimated @ $300 r/t
Rental car estimated @ $180/trip

	Airfare	Rental Car	Food	Amt. Deductible
1 trip	$ 300.00	$ 180.00	$ 100.00	$ 580.00
4 trips	$1,200.00	$ 720.00	$ 400.00	$ 2,320.00
8 trips	$2,400.00	$ 1,440.00	$ 800.00	$ 4,640.00

Assuming a 25% federal tax rate and 8% state income tax rate then this would in effect be a $4640.00 x 0.33 = $1531.20 tax credit.

Nothing earth shattering, but with proper planning it may be a handy twist to help maximize possible investment returns from a rental. This day in age, with high real estate prices, this edge may help you find real estate that meets your investment return. In my scenario, I could find a real estate investment that was roughly $700/yr less profitable in my hometown and still find that is has an acceptable rate of return.