Ask Your Agent For Virtual Tours
After youve found a reputable agent whose working method best gels with yours, ask them to help you locate and virtually tour different housing options. These real estate professionals can help you in your search for properties by speaking with brokers, connecting with other agents, and checking online listings. They can also help you get a firsthand view of properties, whether that means accessing virtual touring options that are already available online of the property, or them physically swinging by a home to take videos or pictures. Helpfully, many smartphones now offer real-time videoconferencing options, meaning that oftentimes your REALTOR® can simply phone you and give you a firsthand 3D view on-demand.
Start Your Property Search
Some real estate investors forgo working with an agent when searching for and buying a rental property. Thatâs fine if you have the experience and are investing in your area. However, if youâre planning on buying a second home for investmentout of state, then you need an agent who works in the housing market where you want to invest â preferably one with at least 5 years of experience. The reason for this is simple: a real estate agent will have more knowledge about the market and will be your advocate throughout the buying experience. Thus, a good agent will help you narrow down your property search until you find the best fit.
If youâre still considering searching for a property without the help of an agent, we can help you with that. Our Property Finder Tool is designed to help real estate investors find the most profitable rental properties in any city and neighborhood in the US housing market. Using different filters, you can easily set your criteria and immediately get a list of properties that match.
As you can see, youâll get data regarding each propertyâs listing price and estimated value. Not only that but youâll also get the cash on cash return of the property whether you rent it out traditionally or as an Airbnb rental! This helps to assure that youâre buying a second home out of state that fits your investment needs and is profitable as a vacation home rental.
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Hiring A Property Manager Is Often A Better Option Anyways
The plain and simple truth is that whether you live near your properties or far away, self-management is a full time job. In this vein, managing real estate properties is not a viable solution for many investors especially those who already have a full time job or those looking for passive retirement income. This line of thinking begs the question, if you already trust your local team to manage an in state rental property, why wouldnt you have the same trust for an out of state team?
To help you answer the above question, and further determine if self-management is a good option for you, here are five other questions that you must carefully consider.
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Resident Groups On Social Media
If you already know the city youre moving to, request to join the community group through social media platforms such as Facebook or Nextdoor. There, youll be able to read posts from residents about things theyre experiencing as they live in the city.
These groups provide a more personal view of life from actual residents who are a part of the community. Youll be able to find hidden gems from people raving about their experience, uncover common problems many residents face and see how neighborly people within the city act towards each other. You can even post in the group introducing yourself as a new resident, asking questions about the area and getting tips and recommendations from people who know it best.
How Do I Buy My First Investment Property
The first thing that would need to be placed into motion is financing the investment. The investment may be made from cash savings. Youll also need to secure a mortgage. Before looking at a property, a mortgage calculator should be used, and at least a preapproval for an affordable mortgage should be in place. Having this pre-approval in place allows the potential investor to scan the market to find an appropriately priced property. When they find the property, the investor would then look to employ the help of a remote real estate agent in order to assist them in their search.
When it comes to buying your first investment property, there are a few specific self-requirements you must take note of. Ensuring that you can meet the needs from the following list is a fantastic starting point in figuring out how to buy your first investment property:
1. Have your mortgage ready
2. Buy single-family homes rather than invest in multiple occupational properties
3. Focus on the return on investment
4. Know your strategy
5. Only purchase what you know
6. Research the area
7. Find out about the neighbors
8. Find a property with great outdoor space
Taking the above steps can really help ensure the investment goes smoothly.
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How To Locate A Good Out
If you have a good idea of your best city to invest in, how do you know which under market value property to buy? Most investors go one of two routes:
- Find a great real estate agent or investor who knows how to scout for good under market value properties. Hopefully, he or she will network with top-notch property inspectors, rehabbers, title companies and a real estate attorneys.
- Find a reliable turnkey property company. These under market value properties have been 100 percent rehabbed and often have tenants already in place.
Which route do you choose? It depends. Many out-of-state property investors want zero headaches or stress. So they purchase turnkey properties.
Other investors want to save money, so they find their own under market value properties and coordinate their own rehabs and property management.
If you handle your own investment properties out of state, consider:
- The quality of work is there for you to see from the start
- The entire investment team is in place
- Higher upfront cost
- Lower ROI
How much is the difference between buying an under market value property yourself or a turnkey property? In my experience, I can do the rehab on a distressed property for half of what a typical rehab crew will charge.
Buying An Investment Property Out Of State
From knowing the local real estate market to navigating a whole new tax system, there is a lot to consider and be aware of when buying out of state. Its worth it, though, as many investors profit from expanding their portfolios and knowledge of other places. The Highlands-Cashiers plateau of Western North Carolina is a popular region on the United States east coast. The weather is ideal and the natural landscape is pure, unfiltered beauty. If youre thinking about buying an investment property out of state, we have some luxurious homes for sale in Cashiers, Highlands, Sapphire Valley, Lake Glenville, Lake Toxaway and Burlingame. Let us know what youre looking for and well get to work helping you find an investment property that checks off the boxes on your wish list! Things to consider when buying an investment property out of state include:
Make the most of your out of state property transaction by following the guide below.
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Plan A Trip To Visit Homes
This will be tough because not all properties that interest you will be available at the same time. You may not be able to see 10 homes on a single visit
This is why desk research is incredibly important when buying out of state. Look at dozens of homes online, and get personalized video tours of ones youre really interested in. Heres where having a hands-on real estate agent really helps. If your schedules dont sync up for a live virtual tour, ask them to see the house and make a customized video for you.
Tell them your priorities number of bedrooms, square footage, yard size, layout so they can focus on those in the video. Thatll help you get a sense of whether the home is a contender, even from afar.
Narrow down your options as much as possible before you visit and tour homes, and be pretty confident that the one is on your shortlist before you visit. You dont want to be traveling every weekend just to see a new listing.
The Best Way To Invest In Real Estate Out Of State
If youve decided investing in real estate out of state is right for you, the next step is making it happen.
Sure, you could do it the traditional way and hire a real estate agent and view properties, but its not feasible if the market is a long distance from where you live. Unless youre investing in an area with a large number of DOM, a house will likely sell before you get out to see it.
Instead, here are your options:
- DIY. Look at the multiple listing service listings yourself using a site like Zillow, call real estate agents, and arrange for virtual viewings of the home. If you like the house and want to buy it, you can do most of the work from your own home but you may need a real estate agent you can trust with such a big job.
- Network. Build a network of real estate professionals around the country, so you know you have eyes and ears all over the place. When you find a property you are interested in, you can rely on your opinion and expertise when deciding if you should buy the property.
- Use a marketplace. Using a marketplace like Roofstock, which specializes in buying and selling rental properties, you know youre getting top-quality service. Roofstock does the research for you and can even certify some homes listed on their website, which makes them eligible for a 30-day money back guarantee. Many Roofstock properties come with renters already in them, too, making it easier to get started on your investment journey.
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Top Tips To Help You Buy Property Interstate
The principles of buying interstate residential property are much the same as buying locally although there are additional matters to consider.
Here are my top nine tips and hints to help you buy a house out of state.
Why Buy A Rental Property In Another Area
We moved to Los Angeles in 2012 and quickly realized the housing market was very expensive and not ideal for positive cash flow investments. This got me thinking about buying property out of state.
I started to Google the best states and cities to buy rental properties and Texas kept coming up as one of the top choices for rental property investing. Heres why I felt good about Texas:
Texas has a bunch of downsides and learning curves, too massive property taxes , a slower appreciation rate, and a much different local culture that took me some getting used to.
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Consider Lending Rules Especially If You Plan To Airbnb The Home
Have a good idea of how youll use the home, as it could impact your mortgage options. Some loans including FHA, VA, and USDA can only be used to finance primary residences. But you can use a conventional loan to purchase vacation homes and investment properties.
But can you rent out the vacation home on a short-term basis while youre not there? Actually, yes you can as long as its a standard Fannie Mae conventional loan.
Fannie Mae states in its second home rider that you can use the property as a short-term rental as long as there are no management companies involved and you maintain control.
The property should still primarily be for your personal use and enjoyment for the first year, according to the rider. After the first year, you may be able to rent it out in a more serious manner, but Fannie Mae does not specifically condone that.
If you plan to rent it out full-time right away, youll be in breach of contract. In that case, youll need to buy the home as an investment property and incur higher rates, fees, and down payment requirements. But thats better than having the loan called due.
Additionally, if you think you may rent your home out on Airbnb even just a few times a month make sure you understand the local laws around those types of properties. Some municipalities have specific rules around renting out parts of a home for short-term rentals, so do your homework before you buy the home.
Make Sure Buying The Home Isnt Just A Very Expensive Hotel Stay
In most cases, simply booking a hotel is a lot cheaper than buying a second home in another state even if you go somewhere frequently.
Sometimes, though, it can make sense to buy a second home if you:
- Visit often
- Believe home prices will go up in the area
- Can use the home for a second income stream
You might want to create an Excel sheet of the costs youd face over the next five to 10 years to see if buying in the area is truly a wise decision.
While the sale price of the home is certainly important, its not the only thing that plays into the costs of a second home.
You can also have your accountant run the numbers on how much youll likely earn from rental income. If youre buying a home in a popular vacation area, are you sure there will be demand for rentals during the off-season?
Maybe youre hoping to earn enough rental income to cover the mortgage payments on the new home, and thats why you feel you can afford the property in addition to your current home. Make sure you understand the local market well enough to estimate the demand for rentals and how much you can realistically earn on the property.
Your accountant can help you break down the costs associated with renting out a home to figure out whether this purchase is really worth it.
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Does The Area Have A Low Median Or Average Home Price
A median home price represents the middle of the road, while an average home price is calculated by adding the prices of sold homes and dividing by the number of homes that have been sold. Together, median and average home prices tell the story of the market. Remember that an affordable market will have an average or median home price that is 3 or 4 times the average income. A non-affordable market will have average or median prices that are 10 times higher than the average income. Ideally, you want to purchase out of state rental properties that are in affordable markets so that you can increase your cash flow and anticipated ROI.
Why Purchase Out Of State Rental Property
There are several benefits to owning rental property out of state. First of all, when you invest in multiple geographic areas, you diversify your rental portfolio. When you own property in different regions, you are able to protect yourself from total devastation if a natural disaster affects one particular area. Likewise, all states, counties and towns have a unique economic system, which is susceptible to market ebbs and flows. If the market declines in one area, at least you also have homes in other markets, which may be doing better economically.
Another big benefit to owning an out of state rental property is that you can choose the specific type of return that you want, and then choose a market that is most likely to deliver your desired results. Are you looking for a property that yields the greatest monthly cash flow? Do you prefer a higher projected appreciation? Depending on your goals, you can identify the best states to invest in real estate, outside of your home market, that are best suited to your goals.
Additionally, if you live in a particularly expensive market, like San Francisco or New York City, it may not even make sense for you to own rental properties in your local area, as the ROI would be too low or even non-existent. However, buying a rental property in another state may allow you to get much higher returns.
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