The late Speaker of the House Tip O’Neill used to say, “All politics is local.” That used to be true about the real estate industry too. In order to make investments, you needed a local expert, someone who understood the market and could guide your way.
The evidence continues to mount that the world is changing in that regard. I’ve talked frequently about the increasing number of opportunities for private individuals to invest in real estate anywhere, circumventing the need for assistance from traditional players in the real estate and financial community.
Part of it is, of course, the reach of the Internet, and the ability of anyone to track comparative housing prices through sites like Zillow, Cyberhomes, Eppraisal, Realtor.com, or to check advertising in multiple cities through sites like Craig’s List or Backpage. But that’s not all — low-cost travel through airlines such as Southwest is changing the landscape too.
Let me use just one woman I spoke to as an example. She was from Maryland, and had called regarding a property we have in Syracuse. She told me she had 15 properties in various states, though primarily in New York, Florida, and Ohio. The properties represented $1.2 million in property value and about $9,000 in monthly income (so-called “passive income,” the amount she gets after paying the mortgages). She wanted to know more about the property because she was flying to Syracuse to look at it the following day.
This is how she spends her time — talking to people in real estate, especially in the areas where she wants to invest, and traveling to see the properties herself. She ended up not pursuing the Syracuse property because it didn’t match the parameters she’s set for her investments. She calculated that it would have a market value after repair of $50,000 in the current market conditions, but that it would take as much as $25,000 for those repairs. Though we paid $7,000 for it, we were going to sell it for around $12,000. She said she likes to have no more than 70% of current value invested, so she passed. But she wants to stay in touch with us.
This woman and people like her are changing real estate investing. Now, you still have to have a title company involved to make sure title is transferred properly, and you need to know about the regulations real estate agents are familiar with. But by taking real estate agents out of the mix, you can save anywhere from 6-10% of your costs. Add to that the opportunity of finding growth areas beyond your own back yard, and the opportunities are staggering.
