Buying a second home in another state is a lifelong dream for many people. Whether you are looking to buy an investment property, or you want to get that perfect vacation home on the lake, you are not alone if you are considering investing in real estate out-of-state. The spread of remote work has made owning a second home more attractive than ever. Many families now have the ability to work remotely from their vacation homes for several weeks at a time.
Yet, if you are considering buying property in another state and have not done so before, this can often seem like a daunting task. You may find yourself wondering how complicated buying a home in another state will be. You might also think about how different the process will be from when you bought your current home.
Buying a home in another state is not that different from buying a house locally. However, there are a few things you will need to consider during this process. To help start, here is a look at six tips for buying a second home in another state.
Find a Local Real Estate Agent
Perhaps the most critical step to take when buying a home out-of-state is to find a real estate agent local to the area you want to buy a home in. Partnering with an agent experienced in the local market ensures that the home buying process goes as smoothly as possible. Not only will a local real estate agent be licensed in the state you want to buy in, but they will also know the ins and outs of the local real estate market. They can tell you more about specific neighborhoods including how safe they are, how much traffic they have, and what kind of amenities you’ll have access to.
Considering you likely do not know the area you will be buying in very well, working with a local real estate agent will be instrumental in helping you find the right home and neighborhood to meet your needs. Make sure that you find a real estate agent who has experience working with out-of-state buyers. They will be more prepared for the challenges that can come with negotiating offers from afar. If you need assistance finding a real estate agent to work with, Weidel Real Estate can help. We have a network of agents that can help you purchase a second home out-of-state.
Consider the Tax Implications
Before you buy a second home in another state, you need to talk to your CPA about the potential tax implications of doing so. This is particularly important if you plan on renting the property out for part of the year.
The last thing you want is to be caught by surprise when tax season rolls around. Even if you only plan on renting the property occasionally, this will still have tax implications as a home rented for more than 14 days per year counts as a rental property to the IRS. If your second home is classified as a rental property, you may owe taxes on any rental income you earn. You won’t be able to deduct interest paid on the home’s mortgage. Take the time to talk to your accountant about how purchasing a second home could affect your tax situation. This way, you will have enough financial preparation when tax season arrives.
Get Pre-Approved by a Lender
The next step you will want to take before you even start looking at homes is to get pre-approved for a mortgage by a lender. This will ensure that you are ready to make an offer when you find the perfect second home. Having a pre-approval letter in hand will also let homeowners know that you are serious about buying a house. However, it is important that you take some time to find the right lender to meet your needs.
The fact is that you can’t assume that the lender who helped you buy your current home will be able to help you with this purchase, as not all lenders are licensed in all 50 states. Take the time to research lenders to find out who works in the state where you want to buy a house as well as to compare interest rates. Once you’ve found a lender you want to work with, fill out an application and have it pre-approved so you can start looking at houses.
Ask About Virtual Tours
Much of the process of looking at homes for sale is through online these days. Buying a second home in another state isn’t much different than buying one nearby; the process will still start with you looking at listings online. Take the time to look through local listings and browse through available photos to get a feel for what style of house you like. Unfortunately, the primary challenge of buying a second house in another state is that if you find a house you like, it can be difficult to find the time to go see it in person. This is where it can be helpful to ask if there is a virtual tour available.
Buying a home remotely is becoming more common and many sellers are posting pre-recorded virtual tours on their listings. A video provides a better perspective of what a house is like than pictures alone. If no virtual tour is available, find out if your agent would be willing to visit the property and give you a virtual tour. This can also be a great time-saver. This way, you can start to narrow down your options before scheduling a trip to visit homes in person.
Plan a Trip to Look at Houses
Of course, even virtual tours can only tell you so much about a home. We recommend that you see a home in person before you buy it. Plan a trip to visit the city and tour each home on your list in person. This will help give you a better feel for any property you are considering buying. This will also help you think about whether or not it would be a good fit for your family.
Of course, you likely have a limited amount of time to view houses. Try to make the most of your time in town and preschedule as many tours as you can fit in. This is why virtual tours are so important. They can help you narrow down your list to a handful of options you want to see in person.
Close on a Home
Once you find a house that meets your needs, you can work with your real estate agent to make an offer and close on the home. Depending on your lender and the state you are buying in, you may be able to sign all of the final documents electronically. Thus, greatly simplifying the process of buying a home out-of-state. If not, your real estate agent can help navigate the closing process if you need to be there in person.
This is why it is critical that you work with a real estate agent who has experience with out-of-state sales. They will be able to walk you through the complexities of closing the purchase of a house in another state.
Are you having a hard time finding a real estate agent you can trust to help you buy a second home in another state? Then consider consulting Weidel Real Estate for assistance. As an affiliate of Leading Real Estate Companies of the World®, our agents can help pair you with the highest caliber of real estate professionals in 70 countries around the globe.
Contact us for assistance in finding a real estate agent who will match you with the perfect second home!