Out-of-State Buyer? Here are Five Suggestions for Not Losing Your Mind

March 4, 2019 / Tips

At high noon on April 22, 1889, some 50,000 people showed up in Oklahoma with one thing on their mind:


This was the famous Oklahoma Land Rush, the origin of the names “boomers” and “sooners.” Thanks to federal laws, all a settler had to do was live on the land and improve it—then they’d have the right to the title on the land.

But even with such lax regulations and favorable property rights, hundreds of legal contests would later plague the many boomers and sooners who flooded the state.

The bottom line: even a century ago, when acquiring this land was simple and essentially free, acquiring real estate in a new state could be a process fraught with legal risks and headaches.

Why should it be any different for you?

The good news is that you don’t have to have the headaches of an out-of-state buyer. Even if you won’t find any free land by moving to a new state, there are plenty of strategies you can employ to reduce your stress, build your knowledge, and give yourself a leg up. Here’s what you’ll need to know:

Suggestion #1: Learn About Your Adopted State

That’s right: when you buy real estate in another state, you’re essentially adopting that state. You’re planting a flag. If you don’t understand the unique laws and regulations in your adopted state—which fees buyers and sellers typically pay, what the property taxes are like, etc.—then you’re setting yourself up for a multitude of surprises down the road.

Yes, having a real estate group help you with an out-of-state buy is a major step in the right direction, especially if they’re based in the state you’re targeting. They’ll know the ins and outs of real estate investing in that state.

But if you want to make sure everything goes as smoothly as possible, do your research.

What does that mean, exactly? Here are a few ideas:

  • Get started early. Even before you make your move, get started with research early. “The earlier people can start the process, the less stressful it is,” William Mulholland told You might find early in the process that there’s some impediment you hadn’t considered, which is why you don’t want to get too far down the road before you face these unpleasant surprises.
  • Make use of the multiple listing service (MLS). Contacting an effective real estate group means you can leverage their access to the MLS to get a sense of the real estate environment in an entirely new state. You’d be surprised how quickly you can set this up, especially if you work with people who have a lot of experience.
  • Feel free to ask basic questions. Your first foray into out-of-state real estate will mean you have lots of basic questions. If you ever feel judged by a real estate group, it could be a sign that you’re with the wrong group. Instead, feel free to ask any questions you need to be answered to feel comfortable with the process and your purchase.  Any real estate group worth their salt will  understand your unique situation and will be happy to answer any questions you have.

Suggestion #2: Understand Your Limitations—and Work Within Them

Depending on your unique situation, you’ll have to define your limitations and how to work within them.

For some people, a neighboring state can actually be quite close by. They have the money to travel frequently and don’t find it a problem to invest in real estate in a different state. Their life can generally fit in a new investment without any real major issues.

For other people, making an out-of-state purchase can come with a completely different set of challenges. Maybe you’re moving to a new state sight-unseen and you need a home as soon as possible. Maybe a change in scenery is more than just an adjustment, but a representation of the new life you’ll have when you start a new job across the country.

Whatever your situation, you’ll have a set of limitations. Learn to work with them.

But what does that mean exactly? If you have the limitation of not being able to travel much before you move into a new home in a new state, then you’ll want to work within the limitations of your schedule and travel availability by contacting a reputable real estate group. Ask them questions. Do plenty of research. Know what you’re getting into well in advance of the move.

If your advantage is that you can travel frequently to the new state before the purchase, think about what your other limitations might be. Is your heart really in the new investment? Your approach should reflect how hands on you wish to be. If you’re investing in real estate to generate an income, ask yourself whether you might do better hiring an out-of-state property manager so you don’t have to travel so much. These are the kinds of questions to ask yourself before you make a big move.

Suggestion #3: Consider the Variables

Now that we’ve tackled the philosophical questions, let’s talk details.

There are a number of variables to consider when making any new real estate purchase, whether or not that includes buying out-of-state. Many of those variables will become even more important when you’re considering a new state—especially since you might not be familiar with them. Here’s what you’ll need to know:

  • Homeowner insurance. Are insurance rates higher in the state in which you’re investing? If so, you might be looking at higher overall bills than you imagined. Or the opposite might be true—you might find a bargain where you didn’t expect one.
  • Tax rates. Owning property in another state will complicate your tax return. Although some states make it easy to own property with minimal taxes, this complication may make you want to think about talking to your tax professional about these potential complications before investing.
  • Mortgage rates. If you’re a riskier borrower from a lender’s perspective than an owner-occupant because you’re investing in rental property out of state, that could potentially add to the overall investment cost. Make sure you understand potential mortgage rates before you run any basic calculations about what an investment might actually cost you.
  • Basic affordability. If you do research like looking up the median cost of a home, that’s all well and good—but what if you have to think about the real estate situation in a specific state? The situation changes drastically when you understand what your specific issues will be. That’s why you should try to stay away from national real estate statistics when crunching the numbers on an out-of-state move or an out-of-state real estate investment.

There are plenty of variables for any real estate transaction, but these are some key variables you’ll have to consider if you add another state to your overall portfolio. If you’re moving from one state to another, you won’t necessarily make your portfolio more complicated, but you will have to think about the different rates of insurance, mortgage, and property taxes before moving.

Suggestion #4: Get Your Timing Down

If you are moving from out-of-state, you’ll want to be very careful about timing. Selling an existing home in one state and moving to another state can require a veritable symphony of orchestration, from the moving costs to closing in each state.

How do you get the timing down just right? First, it requires a lot of planning ahead. If you work with a real estate group that can handle these considerations for you, great. They’ll be able to help you with your scheduling needs and will do everything in their power to make the transition as comfortable for you as possible—that is, if you’re working with a real estate group worth their salt.

The important thing here is to understand your timing and to plan for it. Ask questions of your real estate group. Talk about your scheduling needs. Talk about your priorities. Make sure that these needs are well understood before the entire process begins. This will help you ensure that there aren’t any surprises along the way.

Suggestion #5: Work with a Real Estate Group That’s Done It Before

It comes down to one word: experience.

A real estate group that’s handled buyers from out-of-state before will know the kinds of questions that tend to come up, including:

  • Setting the expectations of what an out-of-state real estate purchase can mean. Even if you’re not prepared for what these variables might be, the real estate group should be.
  • Working with other real estate agencies to ensure a smooth transition, especially if you’re moving from out of state and need to handle coordination across multiple states.
  • Access. An in-state real estate group has access to real estate listings that can give you a full range of options for your new home. After all, if you’re moving to another state, you want to make sure that your journey ends with a place that feels more like home—and less like you’re living in a hotel.

Working with a real estate group that’s done it before is essential for getting the most out of your out-of-state move.

With 5.51 million existing homes sold in 2017 alone and 612,000 newly constructed homes sold in that same time period, there’s no shortage of opportunities to make your own “land rush.”  But you don’t have to leap in head-first the way they did in 1889. With the right strategies in place, you’ll be able to secure an out-of-state real estate investment that makes sense for your situation and helps you build a home or a real estate portfolio that fits snugly into the life you’ve already established. From any state.

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