The more passive income you generate, the more time you will have to pursue your digital nomad lifestyle. One of the best investment options available is through owning rental properties that generate enough positive cashflow to finance your lifestyle.
If the investment property provides enough income, you will be able to limit yourself to part-time work or perhaps not working at all.
The thing is, if you want to build a property portfolio that can finance your digital nomad travelling lifestyle, you will need to adopt a strategy where you can secure affordable properties with the right financial model.
There are a few things that you should consider.
- Where will you purchase the property?
- How much revenue and cashflow profit can the property produce?
- Is there much management required fro the property?
- Will you be able to use a system that allows you to receive the rental income automatically?
How much money will you need?
This depends on where you will base yourself for your digital nomad lifestyle. To be comfortable as an independent person, you will need at least $2000 USD per month.
This amount will be sufficient enough to live in most suburbs and cities around the world.
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Where should you look for properties?
Search for properties in markets that ideally have a low LTV (loan to value) ratio. For example, you can secure properties with deposits of less than 10% of the total purchase price.
Some of the markets to consider include:
- Spain
- Portugal
- Turkey
- United Kingdom (Outside of London and the major metropolitan areas)
- United States
- Bali, Indonesia
- Thailand
To get an idea of some of the investment opportunities, browse the property listings on SpotBlue.
Within the areas, there should be a strong demand for rental accommodation. Signs of these could include:
- Student accommodation demand
- Accommodation close to schools
- Holiday accommodation
- Lifestyle accommodation (Families, near schools)
How many properties should you aim to own to secure enough cashflow?
Most likely, you will need to secure 4 or 5 properties to generate enough positive cashflow, should you be financing the property through a mortgage.
If you purchase the property outright, then you won’t need to consider the financing or mortgage cost. And in this case, 1-2 properties may suffice.
How should you forecast the potential financing costs?
Consider the financing option (principal & interest or interest-only) that you will opt for, and use the following mortgage calculator to estimate the monthly repayment costs.
Ideally, you will want to secure an interest-only mortgage so that you only pay the fee to hold the property, and you can take out the positive-cashflow from the property to support your lifestyle. The second benefit with this strategy is that the equity value in the property will rise, so that when or if you decide to sell the property and exit, you will be able to take a share of the equity profit and use the funds to support your digital nomad lifestyle.
Owning a property will also give you the option to own a base as a digital nomad.
One of the downsides most digital nomads face is never being able to have a base to settle in. If you own a property (or a few), you can always move into one of them and slow down with the travel lifestyle. Or opt to be based in a city until you decide to travel again and use that property to finance your lifestyle.
What are some of the next steps that you should take?
- Develop a source of income.
- Calculate the funding that you can receive.
- Search for properties that’s within your budget.
- Make enquiries for properties that are most likely to have a positive cashflow
- Start securing properties in your portfolio.
I hope that this helps.
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