BY ALEX CAPOZZOLO ON AUGUST 26, 2020
In the age of technology, investing in real estate from a distance has become easier than ever before. Fortunately, most Americans also have access to smartphones and wifi, which enables them to do business on the go and from afar. Although there are new technology-based tools to make out-of-state real estate investing easier, it does come with pros and cons. Click here to read more.
Today, we dive into the benefits of out-of-state investing, along with the disadvantages that investors need to work through. Currently, I live in Santa Cruz, CA and invest 3,000 miles away in Philadelphia, PA.
Outsourcing Property Management
Whether you invest 3,000 miles away, or even 300 miles away, distance forces you to outsource property management. It is a blessing and a curse. For the properties that are easier to take care of, property-managing yourself seems like the right move. It is a way to save money each month versus paying a property management company. Typically, in Philadelphia, we pay 10% of the monthly rent as a property management fee to have the property properly managed.
Overall, I consider this a pro. For the properties that we recently renovated, the management is usually low stress because not many things break or need to be repaired since everything is new. In this case, it can sometimes still be a good idea to property manage yourself if you can. However, if you are investing from a distance, that may not be an option.
For properties that are a headache, outsourcing this role is extremely relieving. If the property has not been renovated recently, minor repairs can keep your phone ringing consistently. At times like that, many investors wished they hired a property management company. Additionally, if the unit has a unique layout and suffers from vacancies frequently, it is also nice to hire that part out. Overall, property management is not an easy part of the process, but if you are investing from miles away, there are some major benefits to outsourcing this role and duty.
Can’t Attend Networking Events or Meetups
Networking is a huge part of real estate! All of us that have been around for a while know that. Although I can attend networking events out here in California (at my local REIA meeting) and still gain value from them, it is not the same as being able to meet local Philly investors face to face and shake their hands. There are, however, many online platforms that allow investors from all over the world to connect, which is helpful. Unfortunately, not all investors use this method, so there are networking opportunities that are being missed out on from not being present in the market that you invest in. I’ve created Meetup Groups before that were fully virtual for Philadelphia investors. We gained some traction, but I learned that it is difficult to inspire people to get on the computer each week for a meeting. Overall, there are business opportunities missed from not being able to attend in-person networking events when you invest in real estate from a distance.
Can’t Meet With Sellers In-Person
I would consider this both a pro and a con. My skills of talking over the phone to property owners have increased dramatically since I sometimes have to buy their property over the phone. Before actually settling, I will of course send someone out to the property to confirm the condition. However, with FaceTime capabilities and photo sharing, I can sometimes skip that step and buy it sight-unseen. If a property is receiving tons of offers, it is helpful that I can buy over the phone because it speeds up the process and makes my offer more convenient for the seller. That is a huge benefit.
There is also a disadvantage to not being able to meet sellers in person. Certain people just don’t like talking over the phone. It is as simple as that! They appreciate meeting someone face to face, sitting down with them, and getting to know them that way. Also, there are times when homeowners are not very tech savvy, so they are not likely to take photos of the property for you or FaceTime with you if you need to see the condition of the property. For cases like this, I work with other partners to attend a seller meeting and work the deal from there.
Alex Capozzolo is the owner of the Brotherly Love Real Estate blog, a member of San Diego Creative Investors Association and a content writer for the real estate industry. Alex’s focus is on helping people through one of the most important investment decisions of their lifetime by seamlessly providing fast, honest, and professional real estate services.