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?

Sometimes The Grass Is Greener On the Other Side

It’s human nature to believe that everything that’s best is already nearby (or even worse, to be outright biased in favor of our own immediate surroundings). Yes, investing locally means you’re familiar with the area, can drive by the property, and take a hands-on approach in 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 being the most valuable markets, with Cleveland (Ohio), Columbia (S. Carolina), and Birmingham (Alabama) filling out the top three.

What Remote Real Estate Investors Should Know

Broadening the locations you invest in can help maximize your returns, while also mitigating your 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 would find in ultra-coveted markets like California. This means that you’re much 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 other markets you see the following median 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.

Additionally, vacancies are less impactful to your portfolio when you have multiple properties generating rent. 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.

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 at the possibilities… together. Take your first step toward becoming a remote investor by calling 888-276-0232 today.

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