Why It’s About to Become a LOT Easier to Invest From Afar in the Next 5-10 Years

by | BiggerPockets.com

The virtual reality industry sits poised on the brink of exponential growth. And the real estate sector stands right behind it, ready to be yanked into a new era of globalism.

Entertainment data aggregator SuperData forecasts that virtual reality (VR) will grow from a $3.78 billion industry in 2016 to a $40.4 billion industry by 2020. Hardly the distant future.

If you’re a serial lamenter of globalization, you probably won’t like where VR is about to take the world of real estate investing.

How Will Virtual Reality Change the Real Estate Industry?

It’s no difficult leap to imagine throwing on your VR goggles and “walking” through a 3D-mapped home. But beyond lifelike high-res, the experience will be truly interactive. You could open kitchen cabinets, open and close closet doors. You could see what the natural light looks like at different times of day, at different times of the year.

If that sounds like science fiction, think again. It’s already happening: Consider Google’s Tango project, which uses smartphones to create detailed maps of interior spaces. Google has been investing massive amounts of money in virtual reality, a logical next step for Google-owned Youtube and more relevantly, their external Street View and internal Tango projects.

Related: What Warren Buffett Just Told Me About Real Estate is Great News for Investors

And VR doesn’t stop with a property’s current condition. Companies like Virtual Walkthrough let users modify the space to suit their own tastes. Want to see what the living room looks like painted with “lilac cream” instead of flat white? No problem. Or maybe with a black leather sectional in that corner? Go ahead, superimpose furniture to see what looks good in the space.

There are shortcomings, of course. You can’t smell mold through a set of VR goggles. You can’t feel the texture of the woodwork or the plushness of the carpet. And who’s to say the property hasn’t sprung a leak since it was scanned?

But physically traveling to visit each individual property has its own shortcomings.


“The Easier to See You With, My Dear”

Within 5-10 years, buyers will have access to this lifelike sense of walking through properties on the other side of the world. They won’t even have to leave their living room (or their real estate agent’s office).

That means that it will be easier than ever before for buyers to confidently buy real estate far from home.

For investors, it’s an exciting prospect. They can forget the limitations of having to physically visit a property and invest anywhere in the country.

Or anywhere in the world.

In fact, a recent Redfin study shows buyers already moving toward more sight-unseen transactions. The study found that a full 21% of buyers since late 2013 had not physically seen the property. On the high end, that figure skewed even higher: Over half (53%) of buyers of $750,000+ homes did not visit before buying.

Globalization, Hedging & Luxury Homes

Globalization has been slower to affect real estate than other sectors of the world economy, but has still plodded forward. While exact figures are difficult to come by since many foreign buyers use shell corporations, case studies offer some fascinating insights.

Consider Vancouver. Despite a median income similar to Reno or Nashville, it sees average home prices approaching $1M. While that might shout “bubble” to some, others argue the cause is actually foreign investment.

Related: 8 Awesome Tech Tools for Landlording, Lead Management, Productivity & More

A full half of luxury homes in Vancouver over the last few years have sold to foreigners. Largely from China and other developing nations, these investors see both diversity and a safe haven away from unpredictable economic and political environments in their home countries.

Nor is Vancouver alone. A study by two Oxford economists found a strong correlation between London luxury home prices and turmoil in Southern and Eastern Europe. In fact, many Brits were outraged to learn that a whopping 69% of luxury homes in London sold to non-British buyers.

Here in the United States, Middle Eastern oil oligarchs increasingly pour money into U.S. real estate, particularly in high-profile cities like New York. Miami’s real estate market has been flooded by illicit money from South American drug cartels and corrupt politicians.

There are only so many countries in the world as stable and transparent as the United States, U.K., and Canada. As the foreign rich seek to hedge against volatility at home, they will keep looking to Western democracies.


The Shift Toward Middle-Class Homes

Foreign wealth flooding into luxury neighborhoods comes with its own pros and cons. Home prices in these cities rise, which is good for existing homeowners and city tax coffers. But first-time buyers and investors in Vancouver are having a tough time finding affordable homes, and higher home prices means fewer landlords willing to rent for anything approaching “cheap.”

There’s another risk, though. With so many wealthy foreigners buying up homes they won’t actually use much, what happens when only a quarter of homes are inhabited in a neighborhood? This so-called “zombie neighborhood” effect has actually happened in the Coal Harbor neighborhood in Vancouver.

These challenges spiral when global demand starts seeping into middle-class housing. As technology such as virtual reality makes it easier than ever to buy real estate anywhere in the world, foreign investment will move beyond the lofty premier districts of New York, London, and Vancouver.

It’s already happening: The average home price among foreign buyers fell nearly 5% in the last year. At the same time, the total number of homes purchased by foreigners rose 3%.

While there are plenty of variables (e.g. the strong dollar) at play here, it seems inevitable that investing in foreign real estate will become more accessible as technology improves.

And the World Gets Smaller

Right now, it’s still largely the rich in developing nations who buy foreign real estate. But as the world becomes a smaller place through technology like virtual reality tours, everyday folks from around the world will have easier access to buy real estate anywhere.

Think back just one generation ago. It was far, far more difficult to scout potential investment properties than it is today, without online listings, instant access to neighborhood statistics, and other Internet-based tools. And if you did find the perfect property, arranging settlement was harder due to more expensive long-distance calling. Shifting funds instantly to anywhere in the world is easier today, as is instant electronic communication. Even finding a good real estate agent or contractor long-distance is much easier in today’s world.

Among individual real estate investors, only the best-funded could really manage it. Today, it’s not uncommon for mom-and-pop real estate investors to buy properties out of state.

How much easier will it be in five years, with high-res, 3D virtual reality tours available for prospective properties across the world?

Whether globalization is a “good” thing or a “bad” thing is a question for eighth graders to debate in social studies. The rest of us should simply do our best to evolve and adapt to the changing times and understand new tools as they hit the market.

Are you ready for long-distance real estate investing? How would your business be affected if it were easier to invest over distances? And if you faced more competition in your home town from distant investors?

Let me know your thoughts with a comment!

About Author

Brian Davis

Brian is a rental investor with 15 income properties, who provides free video training to help everyday people start earning passive income at SnapLandlord.com. He's also the co-founder of SparkRental.com, which provides free services & education for landlords. His rental management is almost completely automated by now, allowing him to travel the world (his current home base: Abu Dhabi).


  1. Remy Piazza

    Just an FYI since Vancouver was mentioned in the article…Toronto is also implementing this…

    …Foreigners who buy residential property in the Vancouver area will have to pay an extra 15-per-cent tax as part of a B.C. government plan to slow the foreign speculation that many blame for making the region’s homes the most unaffordable in Canada.


    • Brian Davis

      Thanks for passing along. I thought about getting into government restrictions and extra taxes on foreign owners, which could be an entire article in itself. It’s definitely a tough balance that city governments have to walk, but ultimately a city government should incentivize people to actually live in the city, and discourage speculators from buying and not actually using real estate. That has less to do with nationality than it does with physical residency though… anyway I’ll stop before I get carried away, but thanks for sharing!

  2. Micki M.

    The VR piece is really true. We’re using 3d video walk throughs for our out of state clients who are relying on our agents to view properties for them – it allows them to participate more and we can do the smelling for them. One thing people assume about investing from afar is that it’s the property that is somewhere else. But sometimes you want to be somewhere else (for example I’m working remotely for the rest of the year), meaning you can still invest in a familiar area which helps.

  3. Peter Crisp

    Being a landlord based in Surrey, BC, who has had to invest in other markets, this is a boon. Even with photos, I regularly make decisions on repairs. For example, today, based on photos, I decided to push back an exterior paint job till next Spring that I was hoping to get done this fall. The more photos/videos and later 3D shots I have, the more I can make better decisions, and also verify that the work is or has been done the way I want. It doesn’t quite replace being there, but it’s very helpful.

    PS I’ve bought more than one income property sight-unseen with lots of photos and formal or informal property condition reports and it’s worked out OK.

    • Brian Davis

      Great to hear Peter, and I’m glad your sight-unseen investments turned out OK. It’s all too easy to imagine them going south. But yeah I think we’ll see more of this, and investors willing to invest from afar may well have a competitive advantage over those unwilling to leave their local comfort zone.

  4. Nathan Bibb

    Investing from afar is a great idea! There are ton of markets out there with tons of potential, but with no local ambition. Not to mention an almost endless amount of relationships that could be build by investing afar! Recently, my company from North East Ohio worked with an investor from Alaska. Together we purchased a 14-unit complex and formed a very profitable team. With VR on the raise, all of this long distance investing will be even easier!

    • Brian Davis

      We definitely live in exciting times! I think investors who can successfully learn to expand their reach will have a huge advantage over those who stick to their comfort zones. But there are definitely risks when you invest far afield, and fresh sets of challenges. It’ll be interesting to see how quickly some of this tech starts to impact REI.

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