Long distance real estate investing is investing in homes that aren’t in your local area, sometimes even invest in homes unseen. Although it sounds risky, it often makes for the most lucrative investments.
Long distance real estate investing is most common for investors living in high-cost areas who wouldn’t be able to make much of a profit investing in homes in their local area. Instead, they turn to lower-cost areas around the country that offer much higher profits and greater diversification.
It sounds strange to think about investing halfway across the country, but there are many reasons to do so.
Diversify Your Investments
When you invest in homes outside your local area, you diversify your risk. Chances are the real estate industry won’t fall apart in your investment and local areas at the same time. For example, if you live in New York and invest in Toledo, Ohio, you’re invested in two separate real estate markets. If the real estate market in New York does poorly, the market in Toledo, Ohio may hold steady, offsetting the losses you realize in New York and vice versa.
It’s like the old saying, “Don’t put all your eggs in one basket.” Investing in nonlocal areas diversifies your investments, much like investing in the stock market. You wouldn’t put all your money in stocks; you’d diversify between stocks and bonds. It’s the same idea with real estate investments.
Find Real Estate Today
The internet, apps, and online real estate platforms make it easier than ever to find properties halfway across the world. You don’t even have to visit the homes in person anymore. You can take virtual tours that basically make you feel like you’re there.
With so many turnkey opportunities available today, you can buy homes that are in great condition, and even that already have tenants, take over the lease, and buy the property. It’s like a ready-made investment handed over to you. With the right property management company, you can manage the property and start earning profits almost instantly without leaving home.
Easily Determine Fair Market Rent
Again, technology comes to the rescue! Pricing a home just right is key to having rock-solid tenants and very few vacancies. However, when you don’t live in the area of the property you’re renting out, it can be hard to know what to charge for rent.
Search other rent prices in the area, and calculate the average rent tenants in the area pay. Use the figures to determine if it makes sense to rent in that area. As a part of your due diligence, check out the area’s crime rate, school ratings, and workplace accommodations.
In short, make sure it’s a place renters want to live, so you aren’t stuck with a vacant property for the majority of the year.
Conduct Your Own Sales Comparisons
Using real estate agents is great, but sometimes you want to collect your own information to make a decision. Using a variety of online platforms, including Roofstock, you can determine the average sales price in an area. Average sales price gives you an idea of how much you should bid on a home, given its condition and days on the market.
You’ll know if the seller’s asking price is within reason or if they’re out of line. With sales comparison prices, you can tell if the area is affordable for you or if you should look elsewhere.
With long distance real estate investing, someone else handles the real estate for you. If you invest in your local area, chances are you’d handle the real estate yourself. In other words, you use up your time and resources to manage the property when investing in local real estate, which may limit how many properties you can own.
If you invest long distance, you hire a property management company to do the work for you. This frees you up and gives you more time to do your research and find more properties to add to your portfolio.
Will You Invest in Long Distance Real Estate?
Investing in long distance real estate is a great way to diversify your portfolio. Investing in real estate can be a lucrative way to make profits, but you can cleverly offset the risks of one market by investing in others. Spreading your investments across the country allows you to take advantage of the varying real estate markets at different times. Use technology to your advantage and realize greater profits investing in real estate.
If you’re looking to invest in long distance real estate, you may need some help finding the perfect property. Check out the Roofstock Marketplace for an easy way to narrow down your options.
Photo by Matt Jones on Unsplash
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