In a world where everything is digital, it seems buying investment property is not limited by location anymore.
In 2020, a survey by MCG Quantity Surveyors revealed that some investors have taken to buying properties an average distance of nearly 300 kilometres away, with only 6.9 per cent of Australian-based investors buying within their home suburb.
MCG Quantity Surveyors director Mike Mortlock said that while many still preferred local investing, the percentages of those who are investing remotely looks set to rise.
The average distance between investors and their investment properties will only continue to increase in response to the ongoing pandemic, as investors set aside the familiarity of their local market to seek out neighbourhoods in other states that might have a better deal, Mr Mortlock said.
On that note, virtual real estate is a growing trend among those who are investing in real estate. With the internet and advanced connectivity options now available, virtual tours, auctions, valuations and other steps in the investment property purchase can all be done online.
If you’re an investors looking to purchase a property from the comfort of your own home, here is our basic guide to virtual real estate investing.
What is virtual real estate investing?
Virtual or remote real estate investing is the process of buying an investment property through online platforms.
Any of the traditional real estate investing strategies you may have been using or are considering (e.g. wholesaling, rental property, flipping, foreclosures) can be done virtually. Your physical presence is not needed in order to find the right investment property, negotiate a deal and close it successfully.
Virtual investing is not an entirely new concept. It’s a more modern take on the concept of buying a property sight unseen. Buying sight unseen is the process of buyers or investors purchasing an investment property without having personally seen it or inspected the property first.
When buying a property sight unseen, the decision to buy is typically rooted on the basis of information gathered from listing, your own extensive research and advice from a property manager or real estate agent. The listing may be from a location interstate or overseas, as long as the buyer has the means and connections to buy the property.
There are major advantages to buying an investment property virtually, particularly in today’s environment.
- Health benefits. Because everything is done virtually, you don’t need to physically present at an auction house or home inspection. You can bid on properties, do virtual tours or complete a deal in the comfort of your own home, without risking exposure to COVID-19 or any other health risks.
- Convenience. You will not need to allot time in your busy schedule to visit a property you are interested in or to take time out of your busy schedule to bid for a property; you can do it quickly and easily online, even while doing other activities. Property management is also a breeze, as you can receive updates from your tenants or property manager online. In some cases, firms also offer a full-scale search, strategy, due diligence, negotiation and bidding service.
- Possibility of better deals. With virtual auctions and tours, you’re no longer limited geographically. You can participate in auctions in any market and put an offer for almost any property up for sale, which could mean more potential deals (as long as you’re really committed to looking).
- No emotional buying. By not seeing the property in person, the emotional aspect is taken out of the equation. This makes it easier to walk away if the price is not right or if the property does not have a good potential rental yield or cash flow.
As many experienced real estate investors will tell you, buying a property you have not seen is not for the faint-hearted. While virtual real estate investing has its perks, there’s also a lot of downsides to buying a property remotely.
- Costs. In exchange for the convenience offered by real estate firms and professionals, you can expect to be charged additional fees. Some experts warn that it’s easy to pay “tourist tax” when buying interstate without local knowledge.
- Increased competition. With properties available on online platforms, you can expect competition to be stiffer. You’re no longer competing with Jim and Bob in the same suburb, you’re now competing against dozens or maybe hundreds of investors from all over Australia. This could make it harder to find a property, or more importantly, to bag a good deal.
- Technological blindspots. While Google Maps and any available information online you can gather are great, and online listings highlight the best parts of a property, there are still issues with a property that you might miss if you are unable to inspect the property physically. For example, if you are basing your decision on outdated pictures of the property listing, you might be in for an unwelcome surprise when you go to see it after sealing the deal. There could have been damage to the property that was not seen during the virtual tours or the neighborhood wasn’t as welcoming as pictures showed. This could mean getting a lemon of a property – and not knowing it until well after you’ve put down the cash.
What tools can I use for virtual real estate investing?
Investing in real estate virtually will require you to have the correct tools to end up with the correct investment decisions.
Because virtual real estate investing is an emerging concept, new tools and updates are being released on a regular basis. So, be sure to do your due diligence and research the industry trends and knowledge to ensure that you are using the most current information and technology available on the market.
Here are some basic tools to help you get started:
- Online real estate sites – Sites like Realestate.com.au and Domain.com.au offer up-to-date information and insight into real estate listings and markets around the country.
- Real estate market reports – The Real Estate Institute of Australia (REIA) and many state and local real estate firms and institutions (e.g. Real Estate Institute of Victoria [REIV] and Real Estate Institute of Queensland [REIQ]) offer online market reports to help you with your property research. You can also obtain real estate market reports from private research firms such as CoreLogic and Domain.
- Professional network – It’s easy to connect with a variety of contractors and freelancers online to support your real estate investment activities and tasks. Connect with a trusted local professional, like a buyer’s agent, to inspect the property on your behalf. You can also employ the services of a local valuer to ensure that you’re not paying too much.
- Online real estate investment groups – There are specialised online groups that allow you to network with real estate industry professionals in other areas. This is a great way to ask questions, build connections to sellers and buyers, and find qualified local market partners, contractors, inspectors and lenders which can help you in your purchase. For example, many Real Estate Investor Associations (REIAs) now have an online presence where you can register and learn where upcoming real estate events will be held (or in some cases, where you can register for online events!)
- Google maps – As the saying goes, when in doubt, Google it. Google maps and images provide a satellite view of properties anywhere with a view available from Google Earth. This will give you a bigger picture of the area surrounding a property you are considering.
- Local government area (LGA) websites – Local council websites are a treasure trove of information if you’re eyeing a property in other cities or states and territories. Not only will they provide you with suburb information, they can provide certain types of information regarding your prospective property. They also provide updates on the LGA’s infrastructure projects and their status, which can help you determine if the property is in an ideal location with the right amenities and facilities.
- Social media and websites – It is easier than ever before to market your real estate investing business outside of your local area. Through social media sites and a quality website, you can connect with potential buyers and sellers anywhere. However, with the rampant increase of online scams and frauds, make sure that you are connecting with legitimate and trustworthy contacts when you use social media.
Don’t forget, Smart Property Investment also provides the latest updates affecting your property investment. Explore our website for the latest property market reports, insights, news and useful tips and strategies from experts!
An investment property refers to a land, condo unit or building purchased to earn profit through rentals or capital appreciation.
A rental property refers to homes or apartments used as dwellings for tenants.