The natural inclination for most people entering the investment property market is to buy locally. However, there may be sound reasons to broaden your outlook and consider investing interstate.
Investing interstate may result in -:
- a better return on investment
- picking up a property bargain as the purchase property may have greater upside for capital growth.
- Accessing a market at a lower point in the property cycle.
When considering an interstate property investment, the following factors should be taken into consideration.
Property management logistics
The practicalities of managing an investment property interstate may appear daunting at first. Sourcing tenants and managing property from afar is fraught with danger, but engaging a property manager may prove to be an easy solution.
Property managers take a lot of the hassle out of interstate property investing by taking care of your day to day property business taks. They can screen tenants, engage reputable local tradespeople to do repair work and carry out inspection duties on your behalf;.
Your choice of property manager will be critical in the overall success of your project. That is why it is wise to probe the local market to see exactly what services are offered by various property managers as the scope and level of service is sure to vary.
Price should not be the sole determinant as various skills and abilities will vary. Some property managers might offer an annual market rent review which is good but pales in comparison to a service that offers suggestions on optimising rental return. Some property managers have a proven track record of screening tenants and managing property. Others may not . Research is key here.
Organise your finance with pre approval
Pre-approval is even more critical than usual as it will alert you to any potential obstacles involved with interstate investment.
Some lenders terms and conditions will vary in line with geographic locations, so ensuring that you have pre approval will save you unnecessary heartache and anxiety.
Property location may affect the amount that can be borrowed and every state has a different range of fees, charges and taxes. Getting a pre-approval can give you the confidence you need to make a sound investment decision.
Visiting the property
The tyranny of distance applies to interstate property investment. Buying a property sight unseen represents a tremendous risk but you simply can’t afford to spend too much time and money inspecting every interstate property that takes your fancy.
While engaging a buyer’s agent can alleviate the situation to an extent, the costs may get out of hand if several properties are deemed to be a poor investment. Again, research is your best friend. The internet makes it possible to do a lot of due diligence on a property prior to getting to the stage of doing a physical inspection. You can access a lot of valuable information such as market updates and property guides from the comfort of your own home.
There are pros and cons involved with any property investment decisions and ultimately it is incumbent upon you to do all necessary due diligence prior to making a final decision.
If you would like to discuss interstate property investment, it may be worthwhile giving our broker at Australian Finance Hub a call to discuss the intricacies of such an investment.
Once you’ve identified a suitable interstate investment property, we can help you organise a loan that is suitable for your needs.