How to Buy Investment Property Interstate

In our last blog we talked about property investment for beginners and highlighted five tips to help you get it right. If you’re investing locally, these five tips are easily employed as you’re on the ground and in the thick of it. But sometimes it makes sense to diversify your property portfolio and invest in properties interstate especially if market conditions are stronger and are likely to yield stronger returns. Sound interesting? Then read on.

Now investing in anything that you can’t necessarily see can be a little daunting but it can be done successfully if you do your homework. The principles used to invest locally must be also be employed for interstate investments – know the market, be prepared and partner with the right people. But there are a few other issues that you must consider to ensure you get your investment decision right.

If you’re considering interstate property investment, here are four key things to think about.

1. Market unfamiliarity

Market research is absolutely vital when you’re considering markets that are unfamiliar. Identify suburbs that you think you might want to invest in and then begin your analysis on-line to gain an understanding of the local economy, rental demand in the area and potential for capital gains. Take the time to look at economic studies focussing in particular on potential population growth or threats that could inhibit rental market demand. Talk to local agents and property experts and if possible, visit the area to get a firsthand feel of the location. Yes, it may cost a bit but it will be money well spent if your investment property pays off in the long term.

2. Buying sight unseen

Buying interstate can mean it is difficult to view properties but don’t be put off. Sometimes buying sight unseen can be advantageous as it removes any emotional drivers from the purchasing decision – the head is definitely more likely to rule the heart! It can also allow you to focus on the important things such as growth drivers and the capacity for the property to make money over the long term. Obviously, employing someone to undertake an in-depth inspection of the property before signing a contract is valuable to ensure you’re not buying a ‘lemon’. It is also worth considering using a buyer’s agent who know and understand the local area, have good relationships with agents so are able to identify suitable properties and are highly skilled negotiators who may be able to snag a bargain on your behalf. Choosing the right agent is the trick!

3. Differences in stamp duty & sale contracts

While the purchase process is similar across all states and territories, stamp duty and land tax does differ considerably which can make a difference to your overall annual expenditure. Contracts of sale also have key differences such as cooling off periods so it pays to have local legal professionals on your side to help navigate the process and ensure all parties are across contractual obligations. First home buyers grants and concessions also vary from state to state.

4. Backyard differences

Housing markets and the needs of tenants across Australia vary greatly so don’t assume that what works in your local area will work in the area you want to invest in. For example, being near the train line in Brisbane or Sydney is often highly valued but in Adelaide or regional cities like Toowoomba, the train is not a relied-upon transport mode; therefore, such a location would not be considered a strength. In fact, it may actually be a negative (imagine if you had to live on a freight train line?) so understanding the needs of the local market is vital to getting your investment right.

Buying interstate can be a great way to diversify your property portfolio and take advantage of strong rental market returns. But you must do your homework, know what the local market actually wants and get a great team in place to help you make the right investment decision. If you’re considering interstate property investment, give us a call as we’d love to help you find that perfect interstate property.

Disclaimer:  Any statements or comments made are general in nature and are neither given nor to be taken as financial advice.

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