We often get asked whether investing in interstate property is worth the risk. Tales of property spruikers and the hassles of buying in an unfamiliar area have turned many investors off looking beyond their home state.
While it’s true that there are traps for unwary investors, there are also a number of very good reasons to buy interstate. As the property market cycle can move differently state by state, when properties are slowing down in some states, in other states they may be growing. By diversifying your assets to include interstate properties, you could expand your potential to enjoy strong
capital growth and healthy rental yields.
As with any property investment, research is the key to making a success of your interstate purchase. Start by reading these four strategies and speak to us if you need professional advice – such as which investment property loan is right for your needs.
The process for buying a property is slightly different in each state and territory. Costs can vary, particularly when it comes to government charges like land tax, stamp duty and registration fees.
There are also differences in offer and acceptance procedures and the length of ‘cooling off’ periods.
1. RESEARCH THE FULL PICTURE
Strike the right balance between doing your own internet research and talking to industry professionals. The more research conducted from a variety of sources, the more likely you are to gain an understanding of both positive and negative aspects of the property. Internet searches, property reports, virtual property tours, buyer’s agents, real estate agents and other investors are all valuable ways to find out whether this property is likely to perform.
2. FACTOR IN THE COST OF A PROPERTY MANAGER
You might not think you need a property manager, but it’s wise to factor in the cost upfront. Screenings tenants, conducting inspections and organising repairs has its challenges when the property is nearby, let alone thousands of kilometres away. Including the fees of a property manager in your budget will ensure you are prepared should you choose not to self-manage.
3. VIEW IT AS A LONG-TERM INVESTMENT
Look not just at the qualities of a property but instead hunt for suburbs that show potential for capital gain and rental growth over a longer period. Positive signs include strong rental demand, population growth, adequate transport links, shops, schools and planned developments.
4. CONDUCT BACKGROUND CHECKS ON THE PROFESSIONALS YOU HIRE
It might not be feasible to make numerous interstate trips, in which case you’ll need to rely on local talent such as conveyancers, solicitors, real estate agents, buyer’s agents, building inspectors, pest inspectors and property managers. To find people you trust, it’s imperative not to be sucked in by sales talk – always request and follow up on references when hiring a professional.
WhiteStar Property are experts in helping clients Australia-wide find and manage investment properties in Melbourne. For a no-obligation consultation with a WhiteStar Property consultant call 1300 652 842.