Investing in Real Estate Remotely

[Rishit Shah]

The real estate market is broken into three broad categories: being a landlord, an absentee landlord and a real estate investor. The first two options require physical presence in the area of your investment property so they are out for most people who want to buy remotely. That leaves us with remote investors - people who invest in real estate across state or national borders without actually living in the area. Buying property remotely can save you the hassle of living in a market with high competition and offer better investment opportunities.

To be successful as a remote investor, you need to understand that buying property remotely has its own challenges. In this article I am going to give you some tips on how to overcome those challenges and start making money from home through investing in properties outside your region or state. Below are the steps I used to buy my first property remotely during the pandemic without ever visiting it.

1) Build a rockstar team

One of the biggest challenges facing any investor is the lack of local knowledge. If you're buying in a state or country where you've never set foot, this is even more important. One common solution investors use to solve that problem is investing alongside an experienced partner who does have local knowledge and can help guide them through the process.

The right team should include at least one of each:

• A qualified real estate agent - someone who knows the property market inside out and has connections with brokers, lenders and similar entities. An agent will also know how to transact deals without getting scammed (or at least minimize your exposure). Furthermore, most states in the US allow only licensed real estate agents to represent sellers.
• A qualified real estate attorney - someone who knows all the ins and outs of property law in the state or region you want to buy. This is important to avoid getting in trouble with a contract that was poorly written causing your deal to go south.
• An accountant - someone qualified to provide financial advice for real estate investments. Accountants are generally more conservative than investors when it comes to their advice because they have professional liability if something goes wrong (rather than, say someone who only has personal liability).
• A banker - someone familiar with local lending practices and willing to help you find the right lending program for your deals.
• A private lender – These guys act as lenders but typically take higher interest rates making them worthwhile only for short-term loans which you can later refinance into a longer term loan or sell the property and repay the loan.
• A Property Manager - someone experienced in property management who can handle find tenants and handle their issues for you.
• A contractor - someone experienced in renovation, repairs and maintenance of the properties you buy. They will be key especially if you are finding distressed properties which you plan on selling later.

One or more of these people will have a lot to do with your success as a real estate investor so make sure to find the best ones before diving into this business. Note that not everyone has access to such resources locally so it may be necessary for some remote investors to outsource certain roles (see below). Then again, if there is no one somewhere near you with the right kind of experience, why would you invest there? If you're going out of state or country then you should also agree on what types of problems require contacting your partners and how urgent they need to be solved.

2) Use the Internet to understand the market

A lot of people are reluctant to buy property remotely because they feel it's too risky. However, the internet has made this risk a lot smaller than it used to be.

• Use the MLS for local market research. If you're considering an investment outside your region or state then use websites like www.zillow.com and www.trulia.com to find out what is for sale locally in the area where you want to do business (I am using these two sites only for example; there are several other similar sites). The key here is not just seeing what is on the market but knowing how much such properties typically sell for . This can differ significantly from one geographical area to another and sometimes the difference is block by block so make sure to check with your agent for that local knowledge. Although some people use the MLS to buy property directly, it's usually best to do your own research first and then go directly to a broker with an offer (or at least an idea of what you want). This gives you more negotiating power and lets you see responses from multiple sellers so you can get better deals.
• Use online forums for local market knowledge. There are also plenty of online communities where prospective buyers and investors talk about real estate. The one I've found most useful is www.biggerpockets.com but there are others as well such as meetup.com where you can network with local investor groups to stay up to date with the market.

3) Use video tour websites

After you've found a suitable property in the local market, I highly recommend doing a video tour of the property to get a better feel for it. There are websites like www.craigslist.com that allow you to hire someone to take a video of the property for you so you can take a look at the property virtually. However, you must be careful about who you hire. You can also ask your real estate agent to do this for you but make sure you are not wasting their time. Send the video to your contractor for a gut check. They can often spot problems that may not be that obvious to you, especially in the beginning.

4) Always have backup team members in case one becomes unavailable for whatever reason.

Having developed my own local resources in the past, I have learned to have backup for every team member, especially the contractors so if they become unavailable in the middle of your project for any reason, you are not stuck in limbo.

If you're just starting out, tagging along with an expert may be another way to go. No matter whether you partner with someone or do it yourself, the most important thing though, is not letting yourself become stuck in analysis paralysis. With real estate investing, you need to make quick decisions or you will very easily get frustrated with the overwhelming thoughts and overthinking. If it's not working out at first, then change your strategy but don't quit!

Finally, remember that some of even the best investors have gotten stuck in dead-end deals early in their career (and went under from there) so do not get too discouraged if things are rough at first. If you meet lots of people, focus on educating yourself and build the right systems, real estate is going to be a sure shot path to success.