The Mental Barriers to Long Distance Real Estate Investing
When people ask us where we invest in real estate, they are often shocked to find out that we don’t invest in our back yard. The truth of the matter is, we don’t currently live in the United States and we probably won’t for many years to come. And in the current location we live, there is a significant amount of red tape for foreign investors. So, does this mean that we have to put our real estate investing on hold? No, absolutely not! Let me tell you why…
Do you invest in the stock market? Most likely you do, or at least part or most of your retirement funds are tied up in it. This leaves your valuable, hard-earned money, vulnerable to the unpredicted rise and fall of the market which is subject to pandemics, Presidential elections, or a CEO’s promising tweets. Now, when you chose which stocks you wanted to buy, at a minimum I’m sure you took a look at the past performance of the stock and then dug into their quarterly and annual financial reports; however, before you purchased the stock did you ever feel compelled to fly to the company’s headquarters, walk around their office building, catch up on the watercooler chat, or have a sit-down meeting with their board members? NO! Of course not! It’s just not acceptable, and a waste of your valuable time. So why would it be any different then with real estate investing? If you have the systems and processes in place that YOU built and that you trust then why would you ever need to fly to the city you’re investing in, go see your property, or walk around the neighborhood when you could build a rock star team that could do all of that for you and report back to you anything you request of them? Although it might take a little more time up front, when you look at it from this perspective, real estate investing actually gives you complete control over the success of your investments when compared to the stock market. I love this control over my hard-earned money, and I love that it’s safer with me when I put it to work to make me even more money.
Real estate investors all over the United States live in areas where it often doesn’t make sense to invest. Especially when it comes to buy and hold rentals. So, there are plenty of successful investors that are forced to invest outside of their home market, whether in different cities, different states, or even different countries (like us!).
I would actually argue that investing out of your own comfy backyard is better for you and your business. Removing yourself from the day-to-day process forces you to think like a business owner (which you are!) and create bulletproof systems and processes. This removes you from working IN your business and allows you to work ON your business. Like a true business owner. Think about all the time you would have to work on your investing business if you didn’t have to drive by each one of your properties just to check on contractors or tenants.
Sounds great right? Not so fast. When you first start thinking about investing out of your area, you will experience a roller coaster of emotions. You will try to justify one area or another just because you know someone in that area, or you have a family member who lives there. And you think “if something goes wrong, I’ll just have Aunt Darleen stop by and she’ll fix it.” But the brutal truth is, Aunt Darleen is just worried about the perm she has scheduled next week, and actually doesn’t have a clue about rental properties at all! I get it. I’ve been there. I kept trying to justify areas that I knew someone in as well. However, what you really need to do is analyze rental markets based on their potential as a rental market and if you happen to know someone that lives there then that’s an added bonus (perhaps only for your mental state, because you know deep down that Aunt Darleen is more worried about posting videos about the service at McDonalds). Next, you’ll think, “well I’ll just change my investing strategy.” I’ll find a partner in the area, or I’ll just buy turnkey, or I’ll just invest in syndications. And although those all sound like safer options, is that really why you wanted to get into real estate investing in the first place? Probably not, but if you don’t have time to build proper systems and processes then maybe it’s right up your alley. Finally, after trying to talk yourself out of investing in an area that you can’t drive by on the way home from work (taking time away from your family), you’ll build up the courage to put together a solid team in a solid area where you can make some serious cash flow.
As you transition your mindset to becoming a long-distance investor, sit back and enjoy the ride! And don’t worry, there won’t be a camera there to capture your facial expressions along the way. ;)
What are your mental barriers to long distance real estate investing?
Reset. Adventure on.
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