When most people hear the term virtual investing, they often think about crypto-currency, NFT’s, or purchasing digital land. But, you may be surprised to hear that there is an investment technique called virtual real estate investing that is not nearly as speculative. Here is a look at the concept of virtual real estate investing and how you can get in on this exciting trend.
What Is Virtual Investing?
Virtual real estate investing doesn’t refer to the purchase of digital land or property, it refers to the practice of buying physical real estate anywhere in the country, using online tools. This means utilizing real estate software to scout deals, finance projects, analyze the numbers, and make purchases all from the comfort of your own home.
The geographic barriers that once prevented investors from expanding across the country without the infrastructure of a major corporation have now been broken down thanks to the internet. Anyone with some money to invest or a decent credit score can now scout and purchase properties all around the country and earn passive income without ever actually setting foot in the location of their investment.
Of course, you must still do your due diligence and put proper systems in place to manage and maintain your investments. But the internet now allows you to handle these tasks from a remote location, so you can expand your empire all across the country (or even the world).
How To Start Virtual Real Estate Investing?
Like any other form of investing, virtual real estate investing requires hard work and careful planning. However, thanks to technological advancement, you can now do most of that work using a laptop and a cellphone. But you have to know where to begin to get the most out of this technique.
Although investing in real estate virtually does eliminate some of the difficulties of purchasing homes in your own area, it also comes with its own unique difficulties. You won’t be able to view the property in person and won’t necessarily have as strong an understanding of the neighborhood and surrounding area as you would if it were your own hometown.
That’s why it’s vital to do your research if you’re thinking of getting involved in virtual real estate investing. It isn’t any more or less risky than any other type of investing, but it presents unique challenges. Once you’ve done your research and decided what market you want to invest in, it’s time to start making moves. But first, you’ll need the proper tools to get started.
Tools You Need to Get Started:
- Digital Equipment: This includes the basic technology you need to run an online business, including a laptop, smartphone, internet connection, printer, and/or scanner.
- Property Research Sites: This includes sites you’ll use to scope out potential properties, including Zillow , Google Maps , Google Earth , and local government websites.
- Other Professional Tools: It’s also important to have a basic suite of professional tools at your disposal to handle important communications and closings. This includes products like DocuSign, G Suite, DropBox, Microsoft Office, and any other program you think may be helpful.
Once you have a handle on the basic tools needed to scout properties and manage your workflow, you’re ready to get started. But in order to actually find and close deals virtually, you may need additional software.
Online Platforms You Can Use
There are plenty of handy real estate platforms available online that you can use to your advantage when looking for investment properties. Here are a few that may be useful for virtual real estate investing.
FlipScout
FlipScout is an online tool that uses data and artificial intelligence to help investors make smarter decisions. It works for both flips and rentals and allows users to search for properties and track important metrics like rehab costs and rental income. Plus, it’s free and allows users to search for properties all over the US.
RoofStock
RoofStock is an online real estate investment marketplace that allows investors to purchase rental properties anywhere in the country. Listings are analyzed by an experienced team at the company and contain useful information such as the gross yield, market rent, and net cash flow. It also features helpful financing tools and allows users to purchase entire portfolios if they have the funds available.
Fundrise
If you’re new to real estate investing and don’t quite feel ready to purchase your own property, there is a platform called Fundrise that sells e-REIT’s to virtual investors for as little as $500. A Real Estate Investment Trust or REIT is a company that owns income-producing real estate and sells shares to investors like stock in a public company. It’s a way to crowdsource real estate investing and provide consistent returns for investors, yet doesn’t require the purchaser to handle any of the responsibilities of owning and maintaining the properties.
Fundrise is the first platform to offer e-REIT’s (a digital version of a traditional REIT) and allows users to invest in a preset portfolio of assets all over the US that would otherwise only be open to accredited investors.
Best Virtual Real Estate Investing Apps
In addition to online platforms, there are a number of helpful apps you can download that will make the investing process quick and simple.
Matterport
Matterport is a technology company that allows users to create 3D property renderings. This can be a great tool to help you visualize what a property will look like once renovated or show it to prospective buyers or renters who are out of town.
Dealcheck
The Dealcheck app is specifically designed for house flippers and buy and hold real estate investors. It can help you find properties that are perfectly suited for renovation, while also providing a database of properties that are perfect for rental property investing.
Dealcheck also gives you access to comps, which can help you assess the after repair value of the property that you’re hoping to invest in.
AirBnB
AirBnB is the perfect app for virtual real estate investing, especially if you’re looking to purchase a property in an area with consistent tourist traffic. This app gives investors access to a large pool of tenants looking for temporary rentals and allows you to fill vacancies with ease. The entire process is done on the app and can save you the time and hassle of finding tenants yourself.
These are just a few of the top apps on the market that can be useful for virtual real estate investing. You can search the app store for others to suit your individual needs.
Advantages of Virtual Real Estate Investing
Virtual real estate investing can be advantageous for several different reasons:
- Opens investors to opportunities across the country: Investors are no longer limited to the deals in their local area. You may be able to find better deals for your strategy in another market across the country and virtual real estate investing allows you to get in on that action.
- Save time and energy traveling back and forth to a property: Although it can be reassuring to see the property, in this day and age, an investor doesn’t have to be present at the physical location to vet the project. All you need is a solid team in place to take care of basic tasks and a proper system to analyze the deal. This saves you time and money that could be better spent on other projects.
- Invest in multiple properties at once: Because you don’t have to waste time going to a physical location, it’s feasible to invest in multiple projects at once. Don’t overextend yourself and bite off more than you can chew. But if you have some experience and want to build a portfolio across the country, virtual real estate investing makes this simple.
- You can invest anywhere in the US
- You don't have to spend time travelling back and forth
- You can run multiple projects at the same time
Disadvantages of Virtual Real Estate Investing
Even though virtual real estate investing is a great strategy for those with a handle on the business, it may not work for everyone. Here are the major disadvantages of virtual real estate investing:
- You can’t always respond to problems yourself: One of the major downfalls of virtual real estate investing is that if a crisis arises, you have to rely on local help. So, if a pipe bursts in the middle of the night, you need the number of a reliable mechanic because you can’t just drive down there and look at it yourself. This may not be a problem if you have a solid network in the area, but it’s something you have to consider before making a purchase.
- You have to do more research: Although you’re saving time and energy by staying at home or the office rather than visiting the property, you have to put that time into thoroughly researching the areas where you’re investing. You may not know other markets as well as your own town or neighborhood, so you have to spend time doing the due diligence to ensure it’s a smart investment.
- You’re at the mercy of other real estate professionals: Virtual real estate investing puts you at the mercy of the professionals you put in place to handle the job – such as your contractor, real estate agent, inspector, banker, etc. This may also require you to spend a little extra money because you can’t handle certain tasks yourself. If you have an airtight team in place, this shouldn’t be an issue. But if someone gets lazy or tries to rip you off, it can seriously impact the project.
- You have to rely on and trust other people
- Researching properties can be more time consuming
- You have to spend money outsourcing key responsibilities to othe real estate professionals
Final Thoughts
Ultimately, virtual real estate investing makes it possible to buy physical real estate entirely online, and it has made long distance real estate investing a distinct possibility for many US investors.
With that being said, you have to do your due diligence and build a solid network to ensure success. But for those with experience who are willing to do the work, virtual real estate investing presents a variety of amazing opportunities.