Strategies

Got What It Takes to Be a Long-Distance Property Investor?

March 16, 2020
Invex
Invex Team

Embrace the freedom to live where you want and invest anywhere that makes sense.

Investing in real estate is one of the surest methods of generating wealth. But it doesn’t make sense in every market. Some geographic areas provide outsize returns, while others make it very difficult to find a profitable property.This situation is made even worse today with some Australian cities like Sydney steadily appreciating, pricing out many potential investors.

With real estate investing being more accessible than ever before due to improved technology, low interest rates and other factors, it’s increasingly hard to find a deal, especially if you limit yourself to one area.

That’s why being a borderless investor can be a good strategy.

The best real estate investors will invest in areas where demand is growing, not just in what is geographically close. To be a strategic investor, you must consider different areas and emerging markets.

And while traditionally, investing out of state was thought of as a risky proposition, in 2020, the rules have been re-written: technology in particular has made it easier to access a bigger spread of properties.


Technology has developed to a degree where the risk of investing in out-of-state properties is lower than ever

Today there are numerous ways to verify property information when you invest outside your own market.

Online searching has changed the game when it comes to due diligence. Whether it’s the reputation of people or businesses, expected rent, or the price of a local contractor, information is readily available on the internet.

Want to confirm the condition of a property you are interested in? Have the brokers send you videos and pictures of the interior and exterior.

While technology has its place, we recommend you also hire an expert broker or agent that has experience of the market.

An agent can help you with names of reliable service providers in the area, such as property managers and repairers. Make sure you run a background check on the agent to ensure they are a good fit.

A final step, although not necessary in this age of technology, is to visit the neighbourhood in person after you’ve considered all the fundamentals on poplation growth, jobs, infrastructure spend, amenities, etc.

You will need to hire a professional property manager to look for tenants, collect rent and handle repairs for you. Check their online reviews as part of your due diligence.

From hiring property managers to inspecting property, long distance property management is possible. Besides email and phone, make use of other tools such as Skype and Whatsapp to communicate with tenants and property managers.

 

A few metrics to assess a promising property investment market

How do you choose where to invest? Here are a few things to consider in your analysis:

  1. Growing Population 

Look for an area that’s growing in population – the faster, the better for real estate appreciation. Population statistics are easy enough to find. A simple Google search will reveal a current figure and a graph.

  1. Age Distribution

Similarly, a healthy and growing area should ideally skew young. More young people, both children, and young adults, are a strong indicator of future growth.

  1. Stable Employment

What’s the local unemployment rate? How does it compare to the rest of the state, and to Australia as a whole? Beyond unemployment, look at how diverse the local economy is. An area that is dependent on a single industry is a sitting duck for economic collapse. 

  1. Schools

Research local school quality, ratings and parent reviews.

  1. Vacancy Rate

Finally, how are housing vacancy rates? High vacancy rates a glaring red flag, indicating low demand and high supply.

 

So, let’s go over a few advantages and disadvantages of long-distance real estate investing

Advantages

  1. Freedom to find more affordable real estate outside the area you reside in
  2. Owning an out-of-state home as a holiday home or an Airbnb rental
  3. Owning a retirement home out-of-state, which you can rent out until you are ready to retire

 Disadvantages

  1. Lack of familiarity with the market
  2. Limited network of service providers
  3. Too much reliance on others

The main advantage of long distance real estate investing is that you are free to explore the best places to invest in real estate without geographical restrictions.

However, don’t make the mistake of jumping into new housing markets blindly. Be sure to carry out your due diligence to ensure that you get a good deal on long distance real estate investing. 

To find the best rental properties out of state, you need to carry out a thorough analysis.

Hero Photo by Simon Migaj on Unsplash

Thumbnail photo by Helloquence on Unsplash

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