Buying interstate investment property - May 2018
By Rich Harvey, CEO & Founder propertybuyer.com.au
The era of borderless investing has well and truly set in and it’s opened up a whole raft of opportunities and dangers for buyers across our wide, brown land.
Property owners have historically bought investments in familiar addresses.
Some even fear to step outside their own suburb to find an investment, reasoning they want to go with what they know. They’ll look to acquire locally so they can ‘keep an eye’ on their holding – a little stalky for the tenants I suppose, but it gives a modicum of calm to the new landlord.
However, the times they are a-changin'.
The internet has made it possible to gain an appreciation for real estate well outside your city’s borders.
The glass-fronted agent’s office with its grid formation of photos and details is going the way of most analogue approaches to sales. Walk-in buyers are a rare bird – even within an agency’s own community.
Online listings now offer a whole new base of prospective buyers and it means a Sydney purchaser has about as much information on a Brisbane property as someone already residing in the River City.
With this in mind, we’ve looked at the advantages and disadvantages of purchasing across state and territory lines, so you can open up the palate of available holdings and avoid the risks of not ‘being local’.
Who buys borderless?
There are generally two groups keen to look at prospects in far off places.
There are those home owners transferring to start a new life’s phase. Not too many years ago, employees looking to pull up stumps and move interstate might seek the help of a professional relocation service. Nowadays, however, a fair percentage are more than capable of researching their own options online.
The second group are, of course, property investors who are seeking to treat the entire nation as their market place and bag an opportunity. This cohort is increasing in number, but without the right guidance, they can come undone.
Borderless buying means investors are no longer tethered to the fortunes of a single city or state taking advantage of different property market cycles.
You can finally break free of local performance parameters, and track big picture, national economic movements to hopefully maximise your working dollar.
Savvy investors are generally well read and researched – and many form opinions of the prospects and opportunities across the nation. Borderless investing allows them to take advantage by putting their money where their mouth is and hopefully enjoy the spoils.
The downsides to not keeping things local is you’re wandering into the unknown, without the backup of local knowledge.
While big data allows us to home research a whole lot more on prospective locations well away from our hometown, some market nuances are only apparent to those who have on-the-ground experience.
Think about it. Even in your own suburb, you know better than any outsider what streets, elevations, orientations and property types are the most appealing.
Familiarity is key to understanding market subtleties.
To overcome this potential hazard, you should be working with a professional who is charged with putting your interests front and centre. They have the knowledge to research an area and pinpoint the appropriate property for your circumstances.
This brings us to another potential pitfall when interstate investing. It’s easier to be hooked in by unscrupulous special interests when you haven’t got reliable local contacts.
These types will have you looking at a white board full of numbers as they spruik unsustainable growth and returns. The worst of them will charge you for their time while receiving a ‘marketing’ kickback from a developer looking to offload stock at a premium price to unsuspecting non-locals.
Work only with buyers’ agents that have a spotless reputation and who work within a code of conduct set by a reliable industry body. Check they are licensed in that state and have the right contacts to find off market opportunities.
Avoiding the pitfalls
There are few ways to help mitigate the risks.
Firstly, do a lot of research. Don’t be superficial – follow up on all available sources and fact check wherever possible to confirm your thoughts about a particular location and opportunity.
Use local friends, family and contacts wherever possible. Despite the size of this nation, ask around. You might be surprised to learn your network includes a local who can give some unbiased advice on how their market is tracking. But also don’t to get swayed by the “know it all” family types, who insist their opinion is the only one worth considering!
Finally, don’t bluster in all guns blazing. The best use of your time is to employ a qualified buyers’ agent who can navigate these unknown waters. Propertybuyer has a wealth of experience in dealing with cross-border transactions and we are linked to the right people throughout the nation.
It ensures our clients get the best from every possible square centimetre of Australia, without the usual risks of venturing into the great unknown.
One final thought – don’t be a lemming when in it comes to property investing. Just because every man and his dog is buying in a particular hotspot today doesn’t mean it is great investment tomorrow.