Many people aren’t familiar with the term hands-free real estate investment but probably know the concept behind it. Basically, it is when you buy an investment property and someone else handles the rest which leaves your hands free. Figuratively speaking, of course.
Everything from finding tenants to managing the unit is taken care of, usually by third-party companies hired by the project’s developer. The organization of this setup can vary quite a bit depending on the location and type of property you are investing in.
For example, condotels are the most popular form of hands-free real estate investment in resort areas. The project’s developer will hire a hotel brand to manage the property, market it and take care of day-to-day upkeep. Another firm will oversee the financial side of things, collecting revenue and paying out returns.
This may be very different from hands-free real estate investment at an urban condominium. The setups here can vary wildly depending on the developer’s own capabilities. Some will hire a property management company to do everything.
Others opt for a more piecemeal approach. They may have a firm manage the daily operations of the building while having internal teams handle the leasing and finances. That being said, the setup will not have much of an impact since most developers offering hands-free real estate investment provide you with a single point of contact.
Is hands-free real estate investment right for you?
Hands-free real estate investment is perfect for those wanting to buy property while letting someone else do all the hard work. This usually comes at a cost with returns here being less than if you did everything yourself. Now, this is not always the case. You should research the potential returns via both methods to see how it affects you.
Another consideration when it comes to hands-free real estate investment is furnishings. Many developers will require you to buy a special furniture package to participate in their programs. This may be included in the sale price but can also be an add on you’re expected to purchase.
You can lose some flexibility with hands-free real estate investment as well. Many developers expect you to place your unit in their rental program for years. This means it may not be possible to take back your property should you want to use it.
If you don’t want to deal with the hassle of managing your property, hands-free real estate investment is a great alternative. The most important thing to consider is if the time and effort you save in having someone else take care of the unit is worth the potential impact it can have on your ROI.