Not only can you buy a house you’ve only seen online, as a real estate investor, you might prefer to do so, at least once you have a system in place. Buying homes online has actually been a strategy for people buying investment property for some time, particularly if said investment property is in an area not local to the investor. And with the coronavirus on the scene, more people have adopted the process as they have become used to doing business virtually, plus not physically going into homes addresses safety concerns.
Buying a home online can speed up the acquisition process, saving you time to plan your next investment opportunity. Here’s what you need to know.
Set parameters for searching
Determine the niche you want to market to for this investment property. This includes price range, home size, location, and any other parameters you deem important.
For example, your niche could be a three-bedroom, two-bathroom home under $200,000 located near a college or university so you can rent to students.
Note that although having some parameters is good to narrow down your market, having too many will make it harder to find the right deal. So limit your parameters to make it easier for yourself.
Check out the neighborhood — virtually
With online house shopping, you probably won’t be familiar with the neighborhoods. But you can find out all the information you’ll need — you guessed it — through online searches. You can get employment data from the Bureau of Labor Statistics, income ranges from Sperling’s Best Places, school ratings from Great Schools, and crime statistics from AreaVibes, all from the comfort of your own computer.
Learn to analyze the property
As with any investment property, whether you’re buying remotely or in person, you need to analyze it to help determine whether it will be a moneymaker for you. There are many formulas for rental properties to determine this. The fastest one investors use is the 1% rule, meaning you should be able to make 1% of the home’s price in monthly rent to make the deal worthwhile. So for that $200,000 property, you’ll want to get as close to $2,000 a month as possible.
If you have a favorite method of running the numbers, use it for your online deals just as you would with any other deal. You can determine what the property will likely fetch in rent by conducting an online search to see what similar area homes are renting for.
Determine what you’ll offer
This step is the same as an offline deal as well. Investors routinely offer less than asking price, but doing so remotely presents more of a challenge if you don’t know the local market and conditions: Is it a buyer’s or seller’s market there? It’s important to find this out so you’ll know how much less to offer and still get the deal. A real estate agent will be a great help with this step.
Put the home under contract