Traditionally, investors have looked upon owning far-away rental properties with suspicion. It seemed impossible to own and manage a property that was hours away from you. In today’s hyper-connected world, these impossibilities have disappeared. If work can be done remotely, why can’t investing in real estate?
Here’s the truth: investing local will only get you so far. Opening yourself up to opportunities across the country is the best decision you can make for your investment portfolio.
Here’s how remote real estate investment frees you up to dream big!
Top Reasons Why Long Distance Investing Makes the Best Portfolio
You gain robust diversification
We can’t overstate the value of portfolio diversification. While yes, you can stay contained in one market and still build multiple streams of income, it’s not the same as spreading your assets across several investment markets. It’s simply the principle of not putting all your eggs in one basket!
Imagine you only invest in your local market. That market is where natural disasters are frequent – flooding, wildfire, earthquakes, tornados…fill in the blank! Every property you own in that market, then, is exposed to that risk. The same can be said for economic risks. What if the local economy suddenly tanks and rental demand dries up? You’ll struggle to fill multiple vacancies in untenable, unsustainable conditions. Are these things likely to happen? Maybe not – but the risk is there and demands mitigation!
What long-distance investing does is simple: it allows you to diversify your portfolio across multiple markets while spreading out the unique risks attached to them.
You can seize a strategic market advantage
Diversification isn’t just about managing risk wisely. You gain a strategic advantage when considering where you invest relative to your finances. The U.S. real estate market is not a monolith. Individual cities and suburbs have vastly different arrays of inventory, price points, and rental demand. What investors should do, then, is choose their investment markets based on:
- Whether the median price point is accessible and scalable.
- Existing and potential demand in the local rental market.
- Growth projections.
- Economic stability and diversity.
Southern markets, for example, tend to be more affordable than either East or West coasts, primarily due to lower population density. This means investors get more for their money and can acquire more properties more quickly – mitigating risk and increasing the volume of cash flow.
You can set up the infrastructure for effective scaling
Scaling your portfolio is impossible alone. While a solo investor could maybe handle a handful of properties, they would need to be centrally located. It’s not feasible to hold an extensive real estate portfolio without help. When you invest remotely, you must rely on others to make it happen.
Often, this comes in the form of turnkey providers. Their role goes beyond selling properties. The best turnkey companies have in-house renovations and management teams to handle the day-to-day while centralizing and standardizing communications and the quality of services.
An efficient, effective infrastructure allows investors to acquire new properties, rent them out quickly, and maintain smooth, consistent management.
You build a team you can leverage
Of course, your management team doesn’t just empower you to own more properties. If you’re dealing with experienced people, they will effectively manage your risks, too. Experience and success often come after plenty of mistakes, trial and error, and setbacks. This is true of investing in real estate.
However, when property owners leverage the expertise of professional management teams, advisors, and turkey companies, they don’t have to make their own mistakes. Your team has been there, done that – they know what to do, what to avoid, and how to handle any problem a property can throw at them!
You remain flexible during periods of rapid change
The real estate market is ever-changing. Savvy investors know the value of agility. Once you put yourself in the remote mindset, you become more adaptable. Your host of reliable contacts means you can seize any opportunity anywhere. If you’ve confined yourself to your local market and don’t have market-spanning professionals to rely on, expansion – especially into other markets – is much more difficult.
Remote investing means you open yourself up to the possibility of more. More opportunities, more places, more properties. Once your foot is in that door, you can invest anywhere!
Choose the partner who specializes in supporting long-distance investors!
