Hands-Off Real Estate Investing ...Really!

Thanks to a couple hundred different crowdfunding platforms, we can all invest money in real property without having to hold title, pay taxes or worry about maintenance. As one post on Techcrunch.com puts it, “Technology has enabled radical changes in how and where people invest in real estate. The old adage that real estate investing is a local business no longer holds true.”

Real Estate Investment Trusts (REITs) are another way to accomplish the same thing, but they are securities, and often subject to the volatility of the stock market, as well as local commercial or residential rental markets.

Now we have a third option, a different type of opportunity to invest in real estate, specifically in single-family homes. One of these, HomeUnion.com, is described as a, “fully managed cash flow property investment marketplace.”

And there’s also OwnAmerica.com, which offers, “nationwide solutions for single family investors.”

What do they offer a real estate investor that crowdfunding and REITs don’t? TechCrunch.com puts it this way, “The fundamental difference in this next wave of funding platforms is that they support true ownership of real estate. Land is the underlying asset, not a piece of paper endorsing fractional ownership. Additional benefits include receiving significant tax breaks associated with home ownership and investment guidance throughout the entire holding period. In short, investors have complete authority over the decision-making process.”

In other words, as the real estate investor, I own the property. HomeUnion and OwnAmerica are real estate brokers with portfolios of houses for sale, and a system for managing those houses as rentals.

Right now I already have a portfolio of houses in Oklahoma City, and I have a system for managing them. But, if I want to diversify into other parts of the country and take advantage of some hot residential rental markets, I could easily do it, without having to travel or find my own local agents, crews or tenants.

However, owning a house with a system in place to rent and manage it is not and will never be “hands-off.” I don’t care how many well-trained brokers, managers and contractors are lined up and waiting to help me, it’s still my responsibility and my bank account. In order to have “complete authority,” the buck is going to start and stop with me.

But it’s a clever idea, particularly the investor training components and the affiliate broker network, which can generate referral commissions for brokers whose local clients might want to expand into other markets. That’s a great idea.

Commoditizing single family homes is happening, one way or the other. It’s happening with all kinds of properties, from mansions to mobile homes. Now there’s just one more way to get involved as a real estate investor.