The real estate market is still driven by property tours and open houses, emails and calls, and in-person back-and-forth negotiations. Nevertheless, slowly but surely, the old approach of investing in real estate is being revolutionized by technology. Enter virtual real estate investing.
For a rising number of real estate investors, virtual real estate investment is swiftly becoming the new normal.
Through it, they buy and hold rental properties in some of the top real estate markets from coast to coast.
Let’s Define Virtual Real Estate Investing
Virtual real estate investing is the practice of doing real estate deals exclusively online.
Also known as remote real estate investment, virtual real estate investors identify and research the best markets for rental property.
They go online to analyze the ROI of specific rental properties, complete due diligence, and close escrow remotely.
Investing in real estate “virtually” may also drastically cut the expenses and time required for individual real estate transactions.
It could even enhance returns.
It breaks down traditional barriers by allowing investors to pick and choose solutions and strategies for their goals.
Outside real estate markets may prove to be more successful over the long haul than somewhere an investor lives.
It helps to raise potential returns and generate generational wealth.
Plus, cutting-edge, state-of-the-art technology equips virtual real estate investors with the information and skills to purchase and hold investment properties.
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How To Start Dabbling In Virtual Real Estate Investing
If you’re already interested in real estate, the next natural step is to take it virtually.
Here are some of its key advantages:
- It has the convenience of doing deals from home.
- It has the flexibility to diversify an investment portfolio with different rental properties across the United States.
- You save more money by not traveling to each prospective property to purchase.
Here are the actions to take today to start investing in virtual real estate and reap those potential returns:
1. Fill your virtual real estate investing toolbox with the proper tools.
Most folks now have the tools and software they need to start investing in real estate virtually in their own homes.
A virtual real estate investor only needs a reliable internet connection, a device to browse the internet, and a scanner or printer.
Investors will be ready to start once they have spreadsheet software and a word processing system.
Virtual real estate investing software and online resource resources include:
- News from reputable sources like the National Association of Realtors (NAR) and HousingWire
- Residential real estate market reports
- Google Earth (to obtain satellite images of properties)
- Online real estate investment groups on social media platforms
- Platforms dedicated to real estate like Realtor.com, Roofstock, and Zillow
- County assessor and recorder sites that keep track of owners, property taxes, and sellers
2. Familiarize yourself with the most popular real estate markets for rental properties.
Some real estate markets can outperform others in cash flow and appreciation.
One of the benefits of virtual real estate investing is that investors have access to a wealth of data.
They can use this information to assist them in assessing the finest real estate markets for rental properties.
The epidemic has increased the tendency of people and businesses to migrate to locations with reduced living costs and taxes.
Naturally, everyone wants an improved quality of life.
WalletHub keeps track of the most fantastic places in the United States.
The platform categorizes them as the best small cities, best cities for jobs, and best-run cities.
Check it out if you’re looking for a place to start limiting your list of possible targets.
Generally, communities where the local economy is diversified stand a greater chance of surviving an economic slump.
That’s compared to places that depend on one big corporation or industry for jobs.
Diverse industries help minimize “boom-and-bust cycles” that affect the local job market and rental property demand.
Census Reporter, Data USA, Census.gov, and BLS.gov are excellent online tools for learning about local economies.
One exception to the varied economic guideline may be tiny college towns.
While renting to college students may necessitate more property management, demand may lead to higher rental income and returns.
The Freddie Mac House Price Index (FMHPI) tracks US properties at the national, state, and MSA levels.
In many circumstances, cities with high home prices also have a higher share of renter-occupied families.
For example, cities with the highest number of renters, like Texas, Miami, and Florida, have high house price indexes.
Metrics to look at to tell how strong the demand for a rental property in a market includes:
- Average household and per capita incomes
- Fluctuations in rent prices every year
- Housing Affordability Index and House Price Index
- Number of renter-occupied households
- Percentage of Gen Z and Millennial renters in the area
3. Formulate your real estate investing strategy.
Buying rental properties, fixing and flipping, and real estate wholesaling are the most common real estate investment techniques.
Purchasing and holding a single-family rental property is a frequent option for many investors to invest in real estate virtually.
Single-family homes are plentiful.
Plus, financing for residential property is available from a variety of sources.
Many tenants appreciate the extra space that a home provides.
Investors may discover two further benefits of the buy-and-hold real estate investing method.
First, it takes less time than active investing, such as flipping a house. Second, daily duties like tenant communication and property upkeep are delegated to a local property management business.
This means less direct involvement is required.
4. Dip your toes in the virtual real estate market by investing in a rental property.
Analyzing the finest markets for rental property investing is just as crucial as virtually deciding to invest in real estate.
The Roofstock Marketplace has helped buyers and sellers execute more than $4 billion in transactions in less than six years.
Investors use technology to help make investment decisions based on insights and proprietary data.
By doing so, they can do business with buyers and sellers all across the country.
Roofstock conducts preliminary due diligence, including ordering a title report when a listing is submitted.
Roofstock manages the entire closing process, with offers negotiated entirely online from start to finish.
Buyers can connect with financing partners to get pre-approval for a loan.
These institutions also recommended that property managers look after the tenant and property after the sale.
It’s effortless to see why some investors think Roofstock and virtual real estate investing go hand in hand.
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Should You Get Into Virtual Real Estate Investing Right Now?
Before investing in virtual real estate, there are several potential benefits and drawbacks to consider:
- Gaining chances to buy and own rental property in some of the top real estate markets in the United States
- Saving significant time, money, and energy by not traveling back and forth to inspect the property, deal with tenants, and manage repairs
- Roofstock and other real estate investing platforms make virtual real estate investing almost as simple as trading stocks.
On the other hand, virtual real estate investing may not be the best for each real estate investor.
Locating the best real estate markets for rental property can be time-consuming!
You’d have to stay at home in front of a computer rather than going to open houses and viewing properties.
Owning a rental property remotely also means an investor needs to hire a local property management business.
Virtual real estate investing generally demands less owner engagement.
So this approach may not be a good fit for those who want to be more involved in day-to-day management.
The Top Platforms For Virtual Real Estate Investing
Does all this virtual real estate investing seem like a good fit for you?
If yes, then you’ll need a couple of starting options.
When shopping for investment homes, there are several practical real estate platforms online that you can utilize.
Here are a few that you might find handy when it comes to virtual real estate investing:
RoofStock is a real estate investment app that lets investors buy rental properties around the United States.
The company’s listings are assessed by a skilled team and provide essential statistics, including gross yield and market rent.
It also includes helpful financing capabilities, such as buying entire portfolios if funds are available.
Matterport is a firm that develops technology that allows customers to make 3D property visualizations.
This might be a valuable tool for visualizing what a house will look like after renovation.
You can also use these models for showing properties to out-of-town purchasers or renters.
Airbnb is an excellent platform for virtual real estate investing.
It’s convenient if you’re planning to buy a property in a tourist-heavy location.
This platform connects investors with a big pool of tenants looking for short-term rentals, making it simple to fill vacancies.
The entire procedure takes place on the app, which saves you time and effort in finding tenants on your own.
FlipScout is an online application that helps investors make better decisions by combining data and artificial intelligence.
It allows users to look for properties and track critical metrics like renovation costs and income for flips and rentals.
It’s also free and will enable users to search for properties across the United States.
The Dealcheck app was created with house flippers and buy-and-hold real estate investors in mind.
It can assist you in locating properties that are ideal for refurbishment.
It also serves as a database of assets suitable for rental property investment.
Dealcheck also gives you access to comparable sales data, which can help you determine the property’s after-repair value.
Fundrise is a platform that sells e-REITs to virtual investors for as low as $500.
It’s an excellent place to start if you’re new to real estate investing and haven’t bought a home yet.
A Real Estate Investment Trust, or REIT, is a corporation that owns income-producing real estate.
It sells shares to investors in the same way that a public corporation does.
It’s a technique to crowdsource real estate investing and generate regular returns for investors.
All this can happen without requiring the buyer to take on any of the property ownership or maintenance responsibilities.
Fundrise is the first platform to offer e-REITs (a digital equivalent of a traditional REIT).
They allow people to invest in a predetermined portfolio of assets across the United States that would otherwise be restricted.
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The Pros and Cons of Virtual Real Estate Investing
Now that you’re clued in on how virtual real estate investing works, its advantages and disadvantages are here.
Of course, you need to know both to make an informed decision.
It saves you the hassle of traveling to and from properties.
Sure, physically seeing your property can be reassuring.
But in today’s market, an investor does not need to be present at the physical place to verify a project.
You need a solid staff to do the essential responsibilities and a system to assess the deal.
This spares you time and funds that you could use on something else.
It opens you up to new investment opportunities throughout the country.
Investors are no longer restricted to deals in their immediate vicinity.
You might be able to locate better offers in another market across the country for your strategy.
Virtual real estate investing is the perfect avenue for you to participate.
It’s easier to invest in multiple properties at once.
It’s possible to invest in various projects at once because you don’t have to waste time driving to the sites.
Don’t make the mistake of overextending yourself by attempting to take on more than you can handle.
Virtual real estate investment makes it simple to create a portfolio across the country, provided you have some knowledge.
Extensive research is necessary.
Staying at home or the office saves time and energy over going to the property.
However, you must use that time to thoroughly investigate the locations where you’re investing.
You might not be as familiar with different markets as you are with your own town or neighborhood.
Therefore, it would help to allocate time to research to ensure that the investment is sound.
You may likely not be able to address problems yourself.
In the event of a crisis, you must rely on local assistance.
So, if a pipe leaks in the middle of the night, you’ll need the phone number of a trustworthy mechanic.
It’s unlikely that you’d be able to drive down and inspect it yourself.
This may not be an issue if you have a solid local network.
But it’s something to think about before making a purchase.
You’d have to rely on other real estate professionals.
You are at the mercy of the specialists you hire to manage the project.
I’m referring to your contractor, real estate agent, inspector, banker, etc.
You might need to put out funds since you cannot complete particular duties on your own.
This shouldn’t be a problem if you have a solid team.
However, if someone becomes lazy or tries to defraud you, it can significantly negatively impact the project.
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Like any other investment, virtual real estate investing comes with its own set of hazards.
You must do your homework and create a solid network to be successful.
However, virtual real estate investing offers a wealth of options to those with experience.
If you’re new to this industry, a willingness to put in the effort will do wonders.