Buying an investment property can be challenging at the best of times. Purchasing a property you’ve never been to can be even more challenging.
For many investors, buying interstate can be very difficult to accept. Both new and experienced investors can feel a mix of emotions. Purchasing a property you’ve never been to can feel like a greater risk. We all work hard to place ourselves in an investment position to purchase a property, so we can understand the reasons why.
As you consider your investment options, there are many reasons why you may want to consider buying interstate. It may be on the basis that the investment facts and figures present better returns to your home state or it may come down to affordability. Some experienced investors may look to benefit buying interstate for diversification reasons.
If you are able to understand and accept the terms of purchasing a property interstate or location you’ve never before, then here are some of the general benefits in doing so.
The benefits of investing in property you’ve never been to
- One of the prime benefits is diversification. As you become a more experienced property investor, you’ll start to notice that not all parts of Australian property markets perform the same at all intervals. Some states or locations will outperform the nation for a period of time, but may also under perform at a point in time in the future. As you diversify your property portfolio, you aim to try and smooth your investment returns with a stable level of income and growth.
- Property values may change due to state government policies or incentives, population growth, infrastructure or employment rates. Many of these economic and political circumstances are unpredictable and therefore diversification can mitigate some of this risk.
- Property affordability is also a key consideration when purchasing you’ve never been to. It is fair to acknowledge that Sydney housing prices are significantly higher that Queensland. On this basis some investors may see more value for money in another state to where they live.
- Another reason can be the influence of tax and/or stamp duty. Some states or territories may have more favourable costs or terms. By diversifying across different states, investors can potentially benefit from differing tax thresholds or government incentives.
How do I purchase a property interstate?
In general terms, the buying process and paperwork required is very similar. Therefore you should conduct the same research as you would buying locally. As you may lack some knowledge and resources, it would be smart to employ the services or a buyer’s advocate who can conduct the research on your behalf.
As you would do purchasing a property, ensure you understand your budget. Seek advice where needed. Also spend some time with a mortgage broker to ensure the location where you aim to invest, is a location approved by banks or financiers for borrowing purposes.
Once you are aware what you can and can’t do in advance, try to remove your emotional attachment and keep a clear head. You are a property investor and you want to maintain your thought process of purchasing a property to make money.
If you’re interested in buying an investment property we welcome the opportunity to help. You can contact us at anytime to discuss your objectives. We can assist you further in buying throughout Australia.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
August 2020
