With the rise of remote work and digital nomadism, investing in real estate as a nomad has become an increasingly popular topic. On one hand, real estate can provide passive income and appreciation over time. On the other hand, managing properties remotely comes with unique challenges. This article will examine the pros and cons of nomad real estate investing, so you can make an informed decision.
Pro: Diversification and passive income potential
One of the main benefits of real estate investing for digital nomads is diversification. Rather than putting all your eggs in the stock market basket, real estate provides an alternative asset class. If purchased intelligently, investment properties can also generate rental income, providing a relatively passive cash flow stream.
Con: Difficult to manage properties remotely
Managing rental properties from afar can be challenging. As a nomad, you won’t be there in person to handle maintenance issues, tenant complaints, repairs, and other management duties. You’ll need to rely on a property manager, which cuts into your profits. There’s also the risk of mismanagement if you don’t choose the right property manager.
Pro: Tax benefits and leverage
Real estate investing comes with substantial tax benefits, including depreciation deductions and exemptions for capital gains tax when selling. You can also leverage your investment by financing a portion of the purchase price with a mortgage loan. This allows you to buy more properties than if purchasing in all cash.
Con: Illiquid asset
Unlike stocks or bonds, real estate is an illiquid asset that can’t be quickly bought and sold. If you need to free up cash in a hurry, it may take months to sell off your properties. This lack of liquidity makes real estate less than ideal for nomads who value flexibility and mobility.
Pro: Appreciation builds long-term wealth
While past performance doesn’t guarantee future results, historically real estate values have tended to appreciate over decades. If you buy in the right markets and hold long-term, the equity can grow substantially. This helps build lasting net worth for when you eventually settle down.
In summary, nomad real estate investing offers diversification and income potential but requires remote management skills. Weigh the pros and cons carefully for your individual situation before deciding if it’s a good fit.