Whether you’re a seasoned real estate investor or a first-time homebuyer, there is a new trend hitting local real estate markets, purchasing a “second” home first in more remote locations. It’s no secret that the biggest factor in many real estate transactions is location, location, location.
In the sellers’ market, we are seeing across the country, that the low inventory is going to keep transactions moving quickly despite prices being far from affordable. This affordability issue is a key to why we are seeing buyers moving to more remote locations for their investments.
What is remote real estate investing?
Simply put, remote real estate investing is owning a home in another city or state from where you reside. This type of investing involves many benefits to the buyer.
With the past few years being an extreme shift in lifestyle for many Americans, buyers are looking for properties that offer more multi-purpose functions to both life and work from home. They have a greater desire than ever for extra space inside and out. These wants from buyers make purchasing in large cities extremely difficult and out of financial reach for many. This in turn creates the push to buy in markets that offer lower property taxes and lower purchase prices.
Pros of remote investing
- Increase your investment opportunities by broadening your geographic scope
- Make profits higher by purchasing in more affordable markets with lower competition
- Minimize financial risk by diversifying the markets you are investing in
- Get passive income from collecting rent
Cons of remote investing
- You must spend time analyzing other markets
- Challenges finding property managers and property maintenance when the location is far from where you live
- The large learning curve in investing in unfamiliar markets
Common mistakes
If you’re planning to invest in a remote location for your first home to live in yourself, or for a rental income, there are common mistakes investors make. The competitive market will leave you feeling the pressure to head to the closing table fast, but it’s important to select the right property for your needs.
Don’t purchase in a weak economy with a declining population. It’s also important to work with an agent who specializes in rental investment properties if this is your goal. Having someone on your team that understands your objectives of being a remote rental owner makes a big difference in the transaction’s success. It’s also important to not depend solely on online technology when making your choice on the property. Sure 3D tours and online listings can give you a good feel for a property, but these tools should not be the only thing you use to purchase your property. Personal, real-life interaction and connections are the key to a successful remote location investment.
According to a recent survey of over 900 real estate agents, 64 percent found a growing trend of buyers purchasing their “second” home first, which involves buying a property outside of a major city. These kinds of transactions can save buyers on average $76,000 at the closing table.
We hope you’ve found this information on purchasing a “second” home first as a buyer or investor enlightening and helpful. Buying out of state in a remote location can deliver large profit margins and can deliver you the lifestyle you’re seeking.
