If you’ve decided to make the move into investment property – or just to expand your property portfolio, you may be thinking about investing the local area.
This is all well and good, but there is a downside here in that this can greatly narrow your options. Similarly, buying in a popular area can be the cause of stress due to greater competition over property.
With this in mind, you may want to think about going further afield in order to snag a really great property at an even better price. Let’s explore the top 5 tips for buying properties on an interstate level.
1) Choose Property Wisely
It might sound a little too obvious, but you really need to apply some discipline when investing in interstate properties. The same disciplines you would expect from buying locally are required here.
You may want to research the drivers of long term capital growth with a specific focus on factors that are particular to a region or suburb. This will normally include considering factors such as population growth, transport infrastructure and the level of industry diversification.
2) Online Research
For many of us, it’s just not possible financially to be making several interstate trips to inspect properties. This is where you may want to think about using online research companies who are able to track down and inspect properties on your list.
Said companies are also able to provide information on suburbs, streets and properties, as well as predictions on price and rental rate growth in an area. Really top online research companies can provide economic property updates on an interstate basis, which will provide a useful insight on a macro level.
3) Don’t Buy With Your Heart
A dangerous trap to avoid when buying interstate, is if you’ve been on holiday to the are you’re now thinking about investing in. When we go on holiday we often fall in love with an area, which can be dangerous from an investment angle.
People who buy property with their hearts will often end up overpaying, simply because of their emotional attachment to the place. Similarly, if a property price is unusually cheap, it is probably for good reason.
Having a great experience in a location is not a good enough reason to invest stacks of cash in a property. Make sure you do all your research about a property and the area before committing.
4) Get To Grips With State Property Cycles
One of the most basic principles of property investment, is that property prices move in cycles. Each state will have its own unique cycle of property prices. This is really important to note, as your property market may be booming locally, but the next state across may be experiencing a financial downturn – making properties in that area less attractive.
This is where property investment research online will help you to gauge how well an area might be doing in terms of property prices.
5) Do The Numbers Add Up?
When investing interstate, make sure that you do the maths. You need to make sure that you can afford the interstate investment, as with any property – but you also need to be able to afford different ownership costs such as stamp duty.
Don’t forget to factor in what you can and can’t claim in terms of tax deductions. Be wary of claiming for travel expenses, as the tax office may take a negative view on this if they feel that your costs are nothing more than an excuse to take a tax-deductible holiday.