Investing in real estate has always been a popular way to earn consistent income and establish wealth for the future. There are good reasons for this. Not only does buying a property provide you with a tangible asset that is nearly guaranteed to increase in value over time, it also offers several tax benefits that can significantly reduce your overall financial burden.
Additionally, real estate investments have proven to be one of the most reliable ways to make steady returns while safely protecting your capital; regardless of market conditions or economic trends. It’s a great hedge against inflation.
Whether you’re just starting out on your investment journey or are an experienced investor looking for new opportunities, there are plenty of reasons why investing in real estate should be part of any smart portfolio strategy. Maybe you’ve already begun building a successful portfolio of rental properties.
Have you considered a new market?
It’s easier than ever to invest in property sight unseen. While this might feel risky, it’s really not any riskier than investing in a property that you’ve visited and walked through yourself. As long as you have access to the right technology and a team of local experts who can be your eyes and ears on the ground, you can invest from anywhere – in any market.
We work with a variety of investors all the time, and one of the trends we’ve seen growing in popularity is buying an investment property without actually stepping foot inside it.
Here’s what you need to know, and how to protect yourself.
Local Experts Can Help You Make a Smart Investment
Investing in a property without seeing it can feel like a daunting task, but having the right experts on your team can make a big difference in how smoothly the process goes. Working with local experts in real estate and property management can offer numerous benefits, particularly when it comes to purchasing an investment property sight unseen.
Your local real estate agent and property management partner will have invaluable knowledge of the area, including current market trends, future developments, and potential risks. This information can help you make informed decisions when it comes to buying your investment property and ensuring that you get the best value for your money.
Working with a local agent and property manager will deliver all the guidance you need throughout the purchasing process, from finding the right investment property to negotiating the right price. Putting together a team of local experts can make the buying process smoother and more efficient, giving you peace of mind when you invest sight unseen.
You’ll need a team of local vendors, a great lender, insurance agents, lawyers, and a lot of other help. Your most important partners, however, will be your real estate agent and your property manager.
- Real Estate Help with Investment Properties
Look for a local real estate agent who has experience working with out-of-state investors. This will help you move through the process with more efficiency and less frustration. You want your real estate agent to understand your investment goals, your timeline, and your budget.
While it’s possible to buy a home without a real estate agent, buying a property sight unseen really requires the expertise and the logistical support that an agent can provide. Here’s what you should look for in your real estate partner when you’re investing in a property that you don’t plan to see yourself:
- Market knowledge. Understanding the local market is probably the single most important factor in selecting a real estate agent. You will need someone who can respect your price range and understand the priorities you have for the property. You’ll need an agent who has a good understanding about the various neighborhoods and communities where properties are listed.
- Negotiation skills. Anyone looking for a real estate agent will want someone who can negotiate well. It’s even more important when you’re investing without seeing the property. You’re trusting your agent to know what a fair offer and counteroffer looks like.
- Look for an investment in technology and great communication. You need a good communicator who will keep you feeling like you’re right there, even when you’re many miles away.
With the right real estate partner, you’ll have a local expert who can show you some good options based on your investment needs and your budget.
- Property Management Help with Investments
A property manager has a different set of skills than your agent, and a lot of experience in the rental market. With a property manager working on your team, you will have someone who can tell you:
- How much rent a particular property is likely to earn.
- Whether a lot of work will be needed before the property is ready for the rental market.
- How long of a vacancy period you can anticipate.
- What you’re likely to spend on routine, emergency, and preventative maintenance going forward.
Property managers can complement your real estate agent, and when you bring in a management professional early, you will have someone who knows your property. There will be less time between closing the deal and getting the rental home on the market.
Leverage the Best Technology
You’ll need a lot of tech help when you’re investing in a property sight unseen. Plan on video tours, video phone calls, and a secure way to swap data and messages back and forth.
When you’re choosing a real estate agent and a property manager, make sure they have the technology that’s necessary to help you invest. You can attend a walk-through via FaceTime, for example. You can get a look at inspection reports and take a look at the neighborhood virtually.
Invest in a Property Inspection
Sometimes, waving an inspection is the competitive leverage you need to have your offer accepted by a seller quickly.
Not a great idea, however, when you’re buying a property sight unseen.
A wide-ranging property inspection is vital when you decide to purchase real estate that you have never seen and will likely never visit. You’ll want to know about any potential problems, especially when we’re talking about an investment property that you’re required to keep habitable and safe.
Home inspections will save you money in the long term and protect you against buying a property that won’t make a good rental. Let your real estate agent set up the inspection, and make sure you’re as much a part of it as you can be. During the inspection, take a special look at:
- Structure and foundation. This includes the roof, the basement, the walls, floors, and frames. If there are any outbuildings like garages or sheds, you want those inspected, too.
- Electrical. The wiring needs to be safe and modern. Outdated wiring is often a problem in older homes. Do all the outlets work? If there are problems, make sure they can be easily fixed.
- Water damage. Water can have a serious impact on a property, and if there are leaks or signs of water intrusion, it could be due to plumbing problems or poor construction.
Review the inspection report carefully, and talk about it with your real estate agent and property manager. If the inspection unveils extensive damage, you might want to re-consider investing in this particular property, or you can use the information to negotiate a better price before you close.
Make Your Offer
How can you make an offer when you haven’t actually seen the property?
You still know what it’s worth, based on the advice of your real estate agent and your property manager. You’ve looked at photos and videos, and you’ve probably taken a virtual tour. You’ve examined the inspection report.
Even without seeing it, you’ll know you’ve identified a good investment property.
There may be a counter-offer, negotiations, and a lot of back and forth. As an investor from out of the area, you’ll likely be in constant touch with your real estate agent during this period. It can feel nerve-wracking when you’re not there, but trust the process and your partners.
Once you and the seller have settled on a price and the terms of the deal, you’ll have to prepare for closing.
It’s not necessary to be physically present at the closing. The closing process can go forth without you there in person. In some cases, an e-closing can take place, through a secure online portal.
The ability to invest in properties and make offers even without seeing the space opens up a lot of doors for investors. You can cast a wider net when you’re looking for new markets to invest in, and you can take some steps to diversify your portfolio by investing in properties you may not have considered earlier.
This is not so uncommon any longer. When you’re ready to explore a market like ours and you need some help investing in our area without actually coming here, we can partner with you to deliver the best possible results. Santa Rosa offers a number of great investment opportunities, especially if you’re looking for real estate that’s likely to grow in value over time.
Contact us at Redwood Residential Property Management, and we’ll tell you more about investing in real estate sight unseen.
Marla Shaw