Looking to diversify your property portfolio? It might be time to step out of your comfort zone and look for properties outside your state or territory.
Buying an interstate property can be a smart move, especially if you’ve found a market that suits your budget and investment strategy. According to Real Estate Institute of Australia president Peter Bushby, buying interstate can be used as a clever strategy to buy at the bottom of the cycle and enjoy capital gains in the future.
However, there are several factors that you need to consider before you buy interstate residential property. As conveyancers, we’ve seen plenty of people make costly mistakes because they rushed into projects or failed to properly research their investments. Here are some of your top considerations:
Learning about the area or location of your property is crucial when investing interstate. To begin with, you should learn about the renters in the area and what type of properties they’re looking at.
Check out demographic insights regarding the features and amenities that could end up being the most popular for your target market, such as the number of bedrooms, the presence of a lawn or garden, and property size. You should also research population growth trends and employment levels as this could affect your long-term capital growth.
Buying an interstate property is not just about looking at the property price. You also have to consider how the other costs stack up.
Take some time to research about the costs in the area you’re considering, as these vary between states and territories. These costs include property taxes, stamp duty, registration fees, and even interstate airfare costs if you need to travel to and from your investment property now and then.
It may be best to talk with a financial advisor or accountant regarding the acquisition and ownership costs when you buy interstate.
Laws and regulations
Just like property prices, laws and regulations vary from state to state, so you need to familiarise yourself with the relevant restrictions.
For example, you need to know about the offer and acceptance procedures in your chosen state. The length of cooling off periods may also vary. If you’re considering getting a home loan, lenders may also impose postcode or location restrictions that you need to be aware of.
A conveyancer can help you navigate the different laws, rules and regulations in the area where you’re buying your property.
Property values move in cycles, so it pays to know where the state market you’re eyeing is headed. Your local property market may be booming, but that might not be the case with other markets.
There are plenty of independent property research websites and businesses that can guide you regarding where an interstate market is heading and where they sit in the current cycle. This will allow you to avoid those heading south and get better opportunities in booming regions.
Finally, you must consider how you’re going to manage an interstate property. Self-management would be quite difficult, so hiring a property manager is your best bet. They can do regular inspections for you, as well as repair and maintain your property without you having to fly all the way to your interstate property. Again, this should be factored into your total investment costs.
These are just some of the considerations you’ll need to take on board when you contemplate investing interstate. Remember that you must engage a conveyancer who operates or has knowledge on the local legislation and conveyancing practices within the state or territory you’re buying in, so be sure to work with an experienced and qualified conveyancer who can offer valuable legal advice about your interstate investment. For an obligation-free chat about your plans with our friendly team at Think Conveyancing, contact us on 1300 932 738, or request a free quote online.