Thanks to recent technological advancements, real estate investors are no longer limited to properties in their local markets. Remote real estate investing is on the rise, with more investors opting to explore different cities and states to find the opportunities with the greatest return potential.
In this article, we’re explaining what you need to know about remote real estate investing, including:
- The benefits of remote investing,
- The tech tools that make these investments possible, and
- How to invest in real estate remotely, starting today!
Understanding the Basics of Remote Real Estate Investing
Remote real estate investing simply means investing in a property or portfolio without physically visiting the asset(s).
There are several different ways to invest in real estate remotely, including:
- Buying a second home as an investment propertyin a different market than the one you currently live in. You can purchase the property and rent it out, either managing it yourself or employing a local property management firm.
- Purchasing shares of a REIT (Real Estate Investment Trust). REITs are companies that own income-generating properties. By buying a share of a REIT, you are entitled to a portion of the proceeds earned by those properties.
- Joining a real estate crowdfunding or syndication project. Crowdfunding and syndication projects allow investors to pool their funds to finance a real estate development, which is professionally managed by the project’s sponsor. This investment model enables remote real estate investors to access high-value deals with low minimum investment amounts and passive return potential.
The Benefits of Remote Real Estate Investing
Investing in real estate remotely offers several advantages, including:
- Geographic diversification. Real estate is hyper-local; one neighborhood can see substantial growth while a nearby neighborhood stagnates. Having properties in different geographic markets helps protect your portfolio from localized market downturns.
- Greater flexibility in property types. Perhaps your local market is full of stand-alone single-family residences, but you are interested in buying a condo as a vacation rental. Expanding your search into other markets gives you access to property types that aren’t readily available locally.
- Potential for higher returns. Perhaps your local real estate market is overpriced, so your profitability potential is limited. Expanding your search into other markets unlocks areas with greater ROI potential.
Potential Challenges of Remote Real Estate Investing
There are a few potential challenges to be aware of when investing in real estate remotely, including:
- Lack of market knowledge. Different real estate markets behave differently. If you don’t understand your chosen market well enough, you could overestimate demand or underestimate expenses.
- Lack of industry connections. You will need “boots on the ground” in your new market, which means establishing a trusted network of professionals, including real estate agents, property managers, and contractors.
- Difficulty managing the property. Not having physical access to your properties can make it difficult to manage your properties effectively. For example, you may have to contact a plumber for simple fixes that you would normally handle yourself as a landlord.
Technology and Tools that Empower Remote Investors
As a remote real estate investor, you currently have lots of tools at your disposal to help you make wise investment decisions from afar. Here is a list of technological resources you can use as you invest remotely.
Big Data
“Big data” is massive data sets that help inform decisions. This is one of the “proptech” (property technology) advancements currently driving the future of real estate investing.
For example, you can use nationwide proptech databases, like Zillow and Redfin, to compare different markets across the country to help you determine the best cities to invest in real estate. You can also use these databases to help you understand market trends in unfamiliar neighborhoods and establish fair market values in those areas.
Online Listing Platforms
Listing platforms are online services that allow you to shop for properties anywhere in the country, and, in fact, around the world. There is some overlap between online listing platforms and big data since big data essentially powers these platforms. Zillow and Redfin, for example, are also online listing platforms. But, while big data focuses on big-picture decision-making, these platforms allow for detailed analysis of individual properties.
With online listing platforms, you can:
- Get a list of active listings that meet your criteria.
- Review details of individual properties, including square footage, year built, and lot size.
- Explore a property’s history, including the most recent sale information and property tax assessments.
- View photos, videos, 3D tours, floor plans, drone footage, and advanced mapping to better understand the properties you’re considering.
Furthermore, you can engage a local real estate agent to physically visit properties on your behalf, potentially offering a live video tour (called a virtual tour) of the property. You can even ask your agent to mount their phone to the dashboard of their car and drive you around the neighborhood virtually.
Virtual Administrative Services
Traditional real estate transactions had to be completed in person. But today, you can use digital transaction services to review, sign, and notarize documents online. Remote online notaries (RON) are now accepted in nearly every state in the US to help out-of-state real estate investors complete their transactions conveniently online.
Critical Steps for Remote Real Estate Investing
Now that we understand the benefits, challenges, and available resources for remote real estate investing, let’s consider how to actually go about placing an investment remotely.
By the way, if you’re looking for step-by-step instructions for investing in out-of-state rental property, make sure you read our article How to Invest in Property Out-of-State.
Step 1: Getting Your Finances in Order
If you will be purchasing a property on your own, you’ll likely need to arrange financing. And this requires having your finances in order. The best place to start is by getting pre-approved for a home loan. Most lenders offer an online pre-approval application. To complete your application, you’ll need to submit:
● Proof of ID, like a driver’s license or passport,
● Proof of income, like paystubs or tax returns, and
● Proof of assets, like account statements.
Step 2: Performing Your Due Diligence
Knowing how to find a good real estate investment is a critical skill for all real estate investors. It includes accurately projecting expenses, appreciation, and rental income potential (or estimating after-repair value if you’re choosing a fix-and-flip investment project).
Step 3: Building a Team of Local Experts
Since you can’t be physically present at your properties, you’ll need locals who can put eyes on the property as needed. Your real estate agent will be instrumental in completing the purchase (and selling the property whenever that time comes). You’ll also need a home inspector and appraiser for the purchase. For a remote house flip, you would need a contractor you trust implicitly to oversee the renovations. And for a rental, you may want to hire a property manager rather than attempting to manage the property yourself from afar.
Step 4: Maintaining the Property and Tenant Relations
Depending on the lease agreement, some maintenance work, like landscaping, for example, may fall to your tenant. But building maintenance, including appliances and fixtures, will likely fall to you as the property owner. You’ll also want to establish and maintain working relationships with your renters. Having open lines of communication can increase resident retention and reduce tenant turnover expenses.
Step 5: Understanding Local Landlord/Tenant Law
It’s critical to understand the laws for the jurisdiction in which your property is located. Some of the best states for real estate investing, for example, have landlord-friendly laws that allow property owners to quickly remove tenants who fail to pay rent. In other states, it can be difficult to evict tenants, even when they have multiple missed rent payments. Know your rights and the rights of your renters. And make sure you’re operating within the legal boundaries of your property’s jurisdiction.
Remotely Invest in Real Estate with Gatsby Investment
If you’re interested in remote real estate investing but have concerns about choosing properties and managing them from afar, consider investing in real estate syndication projects with Gatsby Investment.
Gatsby Investment is an experienced real estate syndication company with an exceptional track record of providing strong returns for investors. We carefully vet investment opportunities, analyzing hundreds of properties to bring investors the deals with the greatest return potential. And our team of award-winning architects, designers, and builders is ready to get to work for you!
With low minimum investment amounts, complete financial transparency, and both short-term and long-term investment options, Gatsby can help you meet your remote investment goals.