One of the many changes in property investment over the past decade has been the increase in borderless buying.
By borderless, I mean buying in a State or Territory other than your own.
Some of the reasons for this include increased education about property investment generally and, finally, the recognition that Australia is a country of many property markets, often operating at different phases of their respective market cycles.
Indeed, according to the Property Investment Professionals of Australia, about 45 per cent of investors are looking to invest outside the state they live in this year. It is important to know the detailed risks analysis and buying strategies for interstate
However, buying somewhere unfamiliar is not for the uninitiated.
So, here some of the dangers of going it alone.
1. Buying sight unseen
Some investors wind up buying sight unseen because they physically aren’t able to inspect the property in a location that may be hundreds or even thousands of kilometres away.
Of course, this is always a terrible idea, as we all know that photos of anything on the internet are often not what they seem.
We invest interstate for clients every day and our team include experts in a variety of locations around the nation that inspect potential investment properties.
They are able to provide feedback on whether the property is worthy of an offer or should be immediately shelved for the next opportunity.
2. Flying visits
Depending on where they are buying, some novice investors jump on a plane to attend half a dozen or more open homes on a single day interstate.
They rush from one to the next, without really having time to take a breath or inspect it thoroughly.
On top of that, if they’re investing in locations where there is plenty of interest, they are likely to have missed out on the property by the time the first open home is even held.
As professional buyers’ agents, we have close relationships with sales agents across the nation who give us early notice of any properties that are coming on the market.
That way, we can determine whether they are a good fit for any of our clients before anyone else knows about the property.
3. Not understanding the area
Another danger when buying interstate is not understanding the local market or the area.
In every market, there are good and bad locations.
Some pockets might be gentrifying while others, a mere few streets away, have a high proportion of housing commission properties, which will always keep prices lower.
Newbie investors who attempt to buy interstate often start with a general concept of, for example, “I want to buy something in Brisbane.”
Then, almost like a game of darts, they cast the net over the whole city, which actually has nearly one million dwellings.
Often, they wind up buying something simply because it is within their budget without understanding whether the location is primed for growth or is more likely to flat-line.
They also might buy a property that is in a flood zone or has high-density zoning, which means it will always struggle to produce above-average capital growth.
So, as you can see, buying interstate isn’t a strategy for investment beginners.
However, it is a strategy for investors who recognise the myriad market opportunities available around the nation – and who recognise that working with experts is their best chance of maximizing them.