Not all real estate markets are created equally, and where you invest your hard earned capital can make all the difference on your ROI. Most people look toward their own backyards for real estate investing, but looking to other markets could mean higher cap rates and more diversity for your portfolio.
In addition to focusing on markets that are close by, many investors also chase after the traditionally popular big metro markets in New York and California. The high mortgages and hearty sticker prices have made it tough to turn a profit in these markets.
In fact, when looking at the worst five cap rates in the country, California & New York are some of the lowest performers.
When evaluating the potential returns on investment, most investors typically go by the 1% rule of thumb. This means that if the monthly rent on a property is less than 1% of the mortgage, it might not be the best investment choice, making it difficult to maintain cash flow while paying off the mortgage.
While the 1% rule might be tough in the metros listed above, other real estate markets fair much better. For investors looking for cash flow through rent, there are markets across the United States, which have proven to generate solid returns for investors.
If you don’t live near a solid cash flow market, you can still easily invest in them. This style of investing is often referred to as remote investing, and it lets you take advantage of some of the best markets in the country.
What is Remote Investing?
Remote investing is a simple real estate strategy that allows you to invest in strong markets across the U.S. This essentially means you own income properties within those markets and work with a partner or partners to oversee all the day-to-day management.
2 Powerful Reasons Why You Should Be Investing Remotely
1. Freedom to Invest in Solid Markets Across the Country
Broadening the locations you choose to invest in can help you maximize your returns. Select markets throughout the U.S. are seeing record highs, and others are producing solid cash flow.
When you invest remotely you can easily access the types of markets seen above. Working with a partner who as already done the research on strong markets can make all the difference.
By investing remotely, you’ll be able to access markets that better fit your investment goals. This means you could specifically choose markets that are inline with your needs, investment capital, and timeline.
2. Mitigate Your Risk
Just like any investment, there are risks that come with investing in residential real estate. One of the best ways to mitigate risk is to invest in different markets.
When you pick investment properties that are located in one market, you are heavily dependent on that local economy for success. When you open your portfolio to multiple markets around the nation, you mitigate your risk and maximize your potential gains.
As an investor, you can implement this concept into your own investing strategy by creating your own “virtual apartment.” This means you buy several single family rentals to create multiple streams of income, like an apartment building. But since your properties are located across multiple markets, you carry less risk than an apartment building that is only in one location and heavily dependent on the swings of that local economy.
By creating a virtual apartment, you take in multiple streams of income while also gaining the diversity that comes from owning real estate in different cities. You are essentially getting the best of both worlds.
If there are so many upsides to remotely investing in real estate, why don’t more investors do it? The traditional way of owning income property has almost always been to purchase properties close to where you live. Breaking that norm presents some investors with the fear of the unknown and the challenge of how to manage your real estate when you don’t live close by.
If you have the right partners, you have nothing to worry about. Knowing that someone will be there to handle a broken garbage disposal in the middle of a weekend, collect the rent, or handle any other tenant issues, can make the process easy and simple. This takes the day-to-day stress off of managing the property and lets you go about living your life.
HomeUnion has pioneered a new way to remotely invest in residential real estate, by taking care of everything from start- to-finish. This includes all of the research and analysis to find quality properties, handling all the paperwork during the acquisition phase, and managing the property, including finding tenants and collecting rent.
Here are two investors who have successfully invested remotely in real estate by partnering with HomeUnion.
As you can see, when you choose the right partner, like HomeUnion, you can invest in the right markets to achieve your goals.