How to Use Virtual Real Estate Investing for Rental Properties

Recent changes in how people work, including social distancing, working from home and new or improved online tools and technology, has made virtual real estate investing more popular than ever. The key to make virtual real estate investing work is to understand how to apply virtual tools and practices to each specific investment strategy, like with rental properties.

With the right tools and techniques, you can grow your rental property portfolio and diversify your real estate investments across geographic areas. Rental properties provide passive income and increased long-term wealth for dedicated real estate investors.

The Value of Long-Distance Real Estate Investing

Most real estate investing strategies work for long-distance investing, including wholesaling, fix and flip and buy and hold. Enjoy the benefits of virtual real estate when you expand your real investing business outside of your local market.

• Higher performing markets – You may live in a saturated market or high-priced area, making real estate investing more challenging. Seeking better markets with lower points of entry will improve your profitability. Where property prices are lower, other costs like labor and marketing are often also lower. This improves your ROI (return of investment) and decreases your time and effort.
• Diversify your portfolio – Your local market may not offer much opportunity for diversification. Investing in different types of properties protects you from shifts in the market. Consider how rental properties like mobile homes, vacation rentals, multifamily housing and more can open the door to increased income.
• Exponential growth – Test how different markets impact your bottom line. Consider where you gain the most value of both your time and money. Focus on the markets that yield the highest ROI for exponential growth of your real estate business or portfolio.

5 Tips for Success with Virtual Real Estate Investing

Know what it takes to find success in virtual real estate investing. If you are willing to put forth the time and effort, the opportunities exist for you to expand your investment horizons.

1. Research Local Markets

For each area you consider investing, take the time to perform your due diligence by researching the area. Look for indicators of economic growth, supply and demand, turnover of property inventory and other key indicators of market potential. Many online resources provide the information you need to begin your research. The MLS is a wonderful tool to explore local markets.

1. Create a Strategy to Find Leads

Locating leads outside of your local market where you don’t have a strong network is more challenging. However, with today’s online platforms, you can search leads remotely. Focus on quality leads versus quantity. Search county court records to find distressed buyers and reach out to those property owners.

1. Build a Strong Local Team

Group your virtual investments into a few local areas and build support teams in each market. You need local support to market and manage your rental properties. From showing properties to maintenance issues, you need people you can trust to represent your business well.

1. Know the State and Local Laws

Protect your investments from fines and legal risks by learning about the local laws and property taxes. Laws vary from state to state and even county to county. For instance, in Illinois you must have a license for wholesale activities. Also, the property taxes in some states or even some areas within a state are much higher than average. This can cut into your bottom line.

1. Perform Due Diligence – Learn as much as you can about the local real estate market before you purchase a property. With virtual real estate investing you aren’t limit to a specific local area. Therefore, don’t settle for a market that isn’t optimal. If you are investing in rentals, know the average rental rates. Understand the rental market demand, resale value and average DOM (Days on the Market). Determine what if any rules apply for contractors, permits and private funding. Entering a new market blind can cost you profitability.

Take the Plunge

Long distance real estate investing offers a new way to make money with rental properties. Expand your reach and protect your business from restrictions or market volatility. Study the market of interest and perform proper due diligence to protect yourself. But, don’t let fear stop you. Take the first steps into virtual real estate investing to exponentially grow across markets.