Priced Out Of Your Local Real Estate Market? Here's How Millennials Are Shopping Online For Investment Properties

For many millennials, buying an investment home in their hometown isn’t feasible. The houses are too expensive, and the cost of living is too high. But many millennials, even those who rent in their hometown, have found a simple and profitable way to invest in real estate using a real estate marketplace called Roofstock.

Roofstock is a marketplace that makes it easy to shop for and buy investment properties online. Millennials are investing in homes halfway across the country, sight unseen. That’s how helpful Roofstock Marketplace is for them.

Since its inception in 2015, Roofstock has seen over $1.5 billion in real estate transactions. The platform makes it easy for investors to choose based on market returns, risk factors, and even tenant risks since most Roofstock properties come outfitted with tenants already.

Roofstock makes the entire process simple. Investors can buy a property online, set Roofstock up to manage it, and collect the monthly cash flow. This means a minimal time investment for investors, yet they earn a decent return.

Why Are Millennials Priced Out Of Their Local Real Estate Market?

The real estate market is saturated with buyers today. The demand far surpasses the supply and has driven prices up considerably this year. The higher prices pushed millions of millennials out who would otherwise take advantage of real estate investments. Millennials entered the workforce during the Great Recession or housing crisis - they didn’t have cushy jobs available to them, so many haven’t had the chance to build up a nice nest egg yet. 

To top it off, there are established investors coming into the scene able to pay cash for properties. When sellers have to choose between a buyer with bank financing or a cash buyer, they almost always choose the cash buyer since it’s a ‘sure thing’ and can close faster.

This leaves millennials in this loop of wanting to invest in real estate but feeling stuck with more traditional investments, such as stocks and bonds, because of the lack of capital. 

What Is Long Distance Real Estate?

Long distance real estate is an investment in any property that isn’t in your local area. It could be across the border in another state or across the country. The idea is that you don’t have to live there or ever go there to invest in real estate.

Long distance real estate investments are possible, even though the idea seems absurd. How would you invest in a property a few thousand miles away? How can you be a ‘landlord’ when you would need an airplane to get you to the property?

Roofstock Marketplace answered these questions and more. The platform brings together buyers and sellers from halfway across the country. It even provides property management services, making it feasible to invest in a property in Dubuque, Iowa, when you live in Boston, Massachusetts, for example.

All you do is buy the property and secure the property management services. Roofstock does everything else for you. In other words, you invest, make the profits, and don’t have to lift a finger - long distance investing is passive investments at its finest. 

Pros and Cons of Long Distance Real Estate 

Like any investment opportunity, there are pros and cons of investing in long distance real estate.

Here’s what you must know.

Pros

• You can find more affordable real estate opportunities much easier, especially if you live in a high-cost area.
• You can earn a monthly cash flow from the rent charged to the tenants.
• Real estate investments offer tax advantages.
• You can diversify from your local economy, even if it’s not a high-cost area.
• You may have a property to move into when you retire if you invest in an area of interest to you.

Cons

• It’s difficult when you don’t know the real estate market in the area to make a sound decision.
• You have to rely on others to manage the property since you can’t be there to fix issues.
• Dealing with late rent payments can be cumbersome.

How Technology Makes Investing In Real Estate Easy

Investing in homes in another state isn't anything new, but the swiftness with which investors can take advantage of the deals, close, and start earning a return is incredible, thanks to the online platform.

What Roofstock does is capitalize on the fact that location is vital. Here’s how.

You’ve heard you need to find the right location to invest in real estate. Yet if it’s not the area you live in because it’s too expensive or not expensive enough, you may think you’re tapped out.

Enter Roofstock Marketplace. You can invest in real estate on the opposite coast and still make money. You don’t have to visit the property. Roofstock provides all the information you need. This means you can invest in the country’s hottest areas, low-cost areas, or areas with great returns no matter where you live.

It may seem scary to think about investing in a state you’ve never even visited, but it may be worth it. Many real estate investors make it a point to invest in homes not in their state for the ease of management (handing it over to a management company) and the better returns.

How To Buy Properties Outside Of Your Area

So how do you go about buying homes outside your area, especially sight unseen? It’s not as scary as it seems.

Sure, if you do it yourself, it’s a TON of work. Visiting properties, paying for inspections, pulling title work, and handling all the legalities can be too much for anyone. But, when you have a platform like Roofstock to handle it for you, it's a lot easier.

With Roofstock, you literally buy properties from your computer. You sign up for a FREE account and can browse properties right away. Most properties on Roofstock are single-family properties with tenants in them. 

You can filter your search by the following:

• Location
• List price
• Neighborhood rating
• Age
• Average school rating
• Remaining months on the lease
• Returns

Once you find a property, you can review its pictures and videos to appreciate the home fully. You’ll also get all the information you need regarding the home’s potential. This includes:

• Cost of necessary repairs
• Time left on the existing lease
• Amount of rent
• Expected expenses
• Property taxes

If you choose a property, you click buy, go through the buying process, and close all from the comfort of your own home.

If you have financing, you can upload your pre-approval letter when you make an offer. This will help in the negotiation process, just like when you buy any home.

You also have the option to select property management through Roofstock. This means you own the property yet don’t have to do any work. Roofstock lists all its fees if you choose their management service to help you make a decision.

Once you close, you start earning cash flow.

The Benefits of Using Roofstock

You’ll receive the following benefits by using Roofstock Marketplace as your hub for investing in real estate.

• Roofstock handles the inspection - All properties listed on Roofstock are certified. This means they passed the inspection and pass Roofstock’s requirements. They only list certified properties. 
• Most properties have tenants - Most Roofstock properties either have tenants in them, or the sellers want to leaseback the property. Either way, you have instant cash flow from the moment you close.
• Low commissions - For buyers, Roofstock is free to use and only costs 0.5% of the sales price if you buy. Sellers pay 2.5% of the sales price, which is much lower than the typical 6% real estate agents charge sellers.
• Property management is available - If you don’t want to manage the property (most can’t due to long distance), you can pay affordable property management rates. This makes you the landlord collecting the payments, but you don’t have to do any of the work.
• 30-day money back guarantee - It’s not too often you find real estate investments that give you your money back if you aren’t happy. With Roofstock, if you are unhappy, you let them know in writing within 30 days. Roofstock will try selling the property (no fees to you). If they can’t sell it within 90 days, they’ll buy it from you.

It all boils down to Roofstock’s features. They make long distance investing possible for anyone - even millennials who don’t own their own property but want the cash flow of rental properties.

The Downsides Of Investing In Real Estate

All investments have downsides or risks. There wouldn’t be any return if everything were 100% foolproof, but knowing the downsides will help you make an informed decision.

• Large down payments are required - If you aren’t paying cash for the home, you’ll at least need a sizeable down payment. By sizeable, it could mean 20% - 30%. It depends on the lender, not Roofstock. Lenders want investors to have ‘skin in the game’ so they are more likely to pay the mortgage and not default on it. 
• Risk of vacancies - There’s always a risk of vaccines even with Roofstock properties that come with tenants. Life is unpredictable, and no technology can predict if and when tenants will leave. If you can’t fill the property right away (or Roofstock’s property management can’t), you could face a loss for at least a few months.
• Property management costs money - If you're investing long-distance, you have to pay someone to manage the property for you. It’s impossible to handle the middle of the night repairs or emergencies when you’re thousands of miles away. The property management costs eat into your profits, but you know the costs upfront and can see how they’ll affect your returns.
• You’ll do some legwork - Roofstock does A LOT. But it’s your investment, and you’ll likely want to do more to make sure you are making a solid investment. Some people don’t mind pointing, clicking, and buying, and others want to do some of the research themselves.

Roofstock Makes Long Distance Investing Easy

It’s no wonder millennials are enjoying the simplicity of Roofstock Marketplace. Without it, you take a large risk investing in properties and renting them out to people halfway across the country. 

How do you know the property is reputable or the area safe? Roofstock does this research and more for you. You can buy and rent homes in respected areas, making decent returns on your investment. 

All you need is a computer, money to invest, and the desire to earn monthly cash flow. If you buy properties and decide to sell them, you too can be a seller on Roofstock. They vet all homes, but not the buyers themselves. 

If you aren’t a cash buyer, they prefer that you are pre-approved by a reputable lender and will even give you financing options from their partner lenders.

Should You Use Roofstock?

If you’re looking to invest in long-distance real estate, Roofstock Marketplace makes it easy. It’s free to browse and requires no commitment. If you find a home you like, do your due diligence using Roofstock’s analysis, and you’ll know right off the bat if the home is right for you.

You don’t have to worry about missing any information - Roofstock vets the property, area, and returns for you. All you have to do is bring the financing to the table, and you could be the long-distance real estate investor you’ve always wanted to be. 
 

Read more about Roofstock: Roofstock Review

Photo by Avi Waxman on Unsplash