Investing Locally or Remotely: Which to Choose?

If investing in local real estate makes sense, investing remotely makes more. After all, life is about expanding your horizons and in order to do this, you often have to look beyond your immediate environment. Simply put, opportunities are never confined to your neighborhood, city, or state— especially when it comes to investing in real estate. With so many nationwide opportunities, why miss out on becoming a remote investor?

exploring remote real estate investing

 

Sometimes The Grass Is Greener On the Other Side

It’s human nature to believe that everything that’s best is already nearby and be biased to our immediate surroundings. Yes, investing locally means you’re familiar with the area, can drive by the property, and take a hands-on approach to managing it. However, while this familiarity is comforting, it does not mean that the most profitable investments are confined to your location. In fact, our analysis of first-year returns—or cap rates—for single-family rental properties (SFRs) nationwide in 2016 underscored the Midwest and Southeast as the most valuable markets. Cleveland (Ohio), Columbia (S. Carolina), and Birmingham (Alabama) comprised the top three markets for first-year SFR returns.

What Remote Real Estate Investors Should Know

Broadening the locations you choose to invest in can help maximize your returns, while also mitigating risk. Select markets throughout the U.S. are seeing record highs; others are producing solid cash flow. Remember that the median household cost across the U.S. is typically a lot less than what you find in many markets. This means that you are more likely to be able to afford multiple investments when looking out of state. For instance, the median home price in Irvine, CA is $769,000, while in less expensive markets you have the following median home prices: $125,400 (Columbia, S.C.), $61,800 (Birmingham, AL), and $52,100 in Cleveland, Ohio (Zillow). As a result, you could potentially buy 3 homes in each of these markets for the same price as one in Irvine.

Irvine Home Prices Versus Other Markets in the United States

This strategy of creating a portfolio of single-family rentals is called building a “virtual apartment.” This means buying several single family rentals to create multiple streams of income (like an apartment building). Since your single family rentals are located across multiple markets (as in the example), they’re less risk than owning a single apartment building in a single market.

A Quick Case Study

Sean Slattery, a 24-year old New Yorker saw real estate investing as his means for achieving financial freedom, generating passive retirement income, and building security for his future family. The problem was that he was unable to afford N.Y. real estate, due to increasingly high home prices. The current median home price in Manhattan, where Slattery is renting, is above $1.1 million. The Solution Managers at HomeUnion ended up helping Sean invest remotely instead. Slattery notes, “HomeUnion was the answer to my problems. They gave me access to markets outside my own by providing professional insight into real estate investing in other markets and by supplying the management service I was unable to provide.”

Conclusion

Explorers would have never found new land if they had stayed home. Similarly, you may have to look beyond your familiar surroundings in order to find your new wealth. Let’s look into the possibilities… together. Take your first step toward becoming a remote investor by calling 888-276-0232 or schedule a consultation today.

4 Comments

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Swati Sinha Nov 21 2016 - 1:38 AM
If you invest locally, you can oversee and coordinate yourself. If you invest in a distant market, you have to completely rely on companies for every aspect starting from procurement to maintenance. As a result, an invester's total cost is significantly more.
    Alisha Chocha Nov 21 2016 - 5:40 PM
    Hi Swati, Thanks for sharing. You're right that remote investing means you have to choose the right partners to help you with procurement through maintenance. Costs are expected in both cases, but increased returns can be found in remote markets as well as the added benefit of diversification. Again, thanks for chiming in, Alisha at HomeUnion
Lilly Font Nov 22 2016 - 6:52 PM
What is the percentage rate Home Union charges me to manage my investments?
    Alisha Chocha Nov 23 2016 - 9:20 AM
    Hi Lilly, If you choose to have us manage your property, we charge a monthly fee of 10.5% of rent. This fee is only paid once the property is leased. If you have additional questions, please let me know. Thanks, Alisha at HomeUnion

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