How To Successfully Invest In Single-Family Rental Properties Remotely

Co-Founder & CEO of PlanOmatic.

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Single-family rental (SFR) properties continue to attract investors as a shortage of rental properties on the market continues to put pressure on prices. According to Corelogic, U.S. single-family rent growth rose by 14% year over year, the 13th consecutive month of record-breaking annual gains.

As the SFR industry continues to heat up, more investors are jumping into the mix and acquiring properties in markets a significant distance from their home base. This is because the entire process of buying a single-family rental property can now be done from afar. But what is the best way for individuals to purchase SFR properties remotely?

As a remote single-family rental investor myself, I have learned firsthand the best ways to identify properties and markets ripe with opportunity. I started an SFR Fund along with 13 other investors, and we have acquired 28 properties in Birmingham, Alabama, to date. All the properties were purchased sight unseen.

Here are five tips for individuals looking to successfully acquire SFR properties remotely.

Gather Real Estate Market Data

Individuals should access and analyze real estate market data to determine a market with great cap rates and cash flow for SFR property investments. Some great resources for real estate data include Attom and Entera.

Another technique for determining a solid investment opportunity is to use the real estate investing 1% rule, which measures the price of the investment property against its generated gross income. For an investment to pass the 1% rule, its monthly rent must equal to or reach no less than 1% of the purchase price. This is an indicator to the investor of whether they can at least break even on the property.

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Individuals should also consider looking at county records to assess and understand where institutional investors are purchasing. While this is not a foolproof way of determining a solid investment market, it does provide a good overview of the markets that larger investors have identified as strong for SFR property investment. This information can be very telling and help inform your investment decision.

Conduct Neighborhood Research

Before investing, individuals should understand the rental laws in each state and municipality. It is important to understand your rights, protect your investment and run a profitable business. Look for cities where the cost of living and doing business is low and the quality of life is on the rise. Job growth in the area is a key factor to consider as well as affordable property prices.

Find A Local Rental Real Estate Agent

Real estate is a local and specialized business. Find a real estate agent who not only specializes in rental properties but who is also a local expert and can help you find the best investment property. Local agents understand the ins and outs of each neighborhood, comparable properties, the average market price for buying and selling and current area trends. They also often know the agent on the other side of the table which can be beneficial in getting the deal done. A local agent can help guide you through the property purchasing journey and save you time and stress.

Leverage Property Technology

The power of the internet and modern technology has forever changed the real estate industry. Real estate investors can now search and view homes on the market through online listing platforms such as Realtor.com and Zillow. These platforms can be extremely beneficial during the search process to gauge pricing and see available inventory, especially for remote investors. In addition, property technology such as 3-D tours and digital floor plans allow investors to view and conduct a virtual walk-through of a home remotely.

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Investors can utilize these tools to inspect homes at their convenience and prior to making a purchasing decision. And when investors are ready to acquire a home, they can leverage digital transaction services to review, sign and notarize documents online.

Identify A Local Property Management Company

For remote investors, finding a local property management company that can help assess your property investment and take care of the property and the tenants’ needs on an ongoing basis is critical. I cannot emphasize this enough. I believe a good property management company can help make or break an SFR investment for remote investors.

It has never been easier to purchase SFR properties remotely than it is today due to the advancement of technology and online information. Individuals that conduct thorough market and neighborhood research, identify strong local partners and leverage property technology and online information will be better positioned to invest in SFR properties in various markets without ever seeing the home in person.

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