Are you nervous about taking the plunge into real estate investing? Well, you aren't alone. It can be intimidating to find the best places for real estate investment, make the decision to invest in something worth several hundred thousand of dollars, all the paperwork, and other variables. Further, the idea of investing in a home that is far from where you live – possibly thousands of miles away – can be even more nerve-racking. Again, feeling this way is normal, but largely unnecessary. In this short video, I explain why you don’t need to be nervous about buying a home far from where you live.
It doesn’t matter where you live. What matters is where you invest. What matters is identifying the best places for real estate investment. What matters is the ratio of the value of the house to the rent it’s going to fetch. What matters is how well your rental income will help you repay the loan you’ve taken.
So, for instance, if I buy a property in the San Francisco Bay Area for about two and a half million dollars, I have to think of the rent this will fetch. If it is going to get only about $5700 or thereabouts, then it doesn’t make a lot of economic sense. Buying such an expensive property will also mean a huge loan and bigger down payment.
On the other hand, if you're paying about $280,000 for a house elsewhere and then you're being offered rent in the region of $1900 a month then this makes sound economic sense. This means that your loan isn't going to be as big, and your loan-to-rent income ratio is much more feasible. So, as I always advise investors, there should be considerations other than where you live that should decide where you should invest.
You could live in one corner of the country and buy a home in a whole other corner of the country, and you would have nothing to be nervous about. While it is natural to be nervous about the whole process, this is only because you're doing it for the first time. I can tell you, I was nervous about my first home too! However, by the time a person buys their second, third, or seventh home, they will be almost bored with the whole process. Because now they know there was nothing to be nervous about in the first place. And not much to do either once it’s been rented out.
Now, the investor knows that the property manager will take care of the day-to-day overseeing of the property. The investor can choose to visit their property but they don’t have to. They can keep in touch with the property manager and get monthly updates – there is really very little for them to worry about. With the kind of communication technology we have at our disposal today, it really doesn’t matter how far away your investment property is from where you live.
If you have any other reservations about investing in real estate, you could reach out to us at ICGRE at any time. To know more about our Remote Control Retirement Riches formula that has guided thousands of investors, sign up for our quarterly real estate event.