If you’re an avid investor in the property market, you’ve probably realised many of the best buys aren’t necessarily in your own backyard. And while you’re interested in those interstate hot spots, you’re more hesitant to invest in unknown territory.
Now, if that sounds like you, you might be wondering how you can safely make an interstate purchase. In particular, you’re wondering what the most important things are that you should look out for.
There are three things to consider about an interstate purchase before you take the plunge.
Research key data points about the suburb
It’s not enough to like the suburb or feel like it’s a good place to invest, you need to know the numbers.
Start by diving into the data and find out the specifics about the suburb you’re interested in – short and long-term growth data for particular suburbs can be a good place to start and often shows whether they’ve been positive performers over time, as well as vacancy rates, median prices and how long properties take to sell.
Much of this data can be found through property investment publications or sites like CoreLogic. If you want to dive into the details then specific research sites like RiskWise and Ripehouse will provide information on social housing, crime rates and supply in the pipeline which is essential to understanding where an area is headed in terms of growth.
Understand the legal implications of an interstate purchase
Legal considerations are the second important factor you should investigate. Stamp duty and contractual requirements can differ between states and can have a big impact on the bottom line.
Victorian stamp duty, for example, is much higher than Queensland and could make the difference to where you end up buying if you’re trying to watch the pennies. When it comes time to do the contract, you might find different terms at play here too.
Some areas can be good for proceeding with conditional approval, while others require unconditional approvals straight away. Knowing what the agent is prepared to take and how the market will react to your terms and conditions can make all the difference when putting your offer together.
Talk to a property manager for on-the-ground insights
One of the industry secrets that I have as a buyer’s agent is to tap into the knowledge of property managers in the area when I’m doing my research. This is as simple as giving them a call on the phone and telling them you’re thinking about buying in the area and asking different questions. Why property managers? First of all, property managers who work the local area tend to have a good understanding of what the suburb is like – which side of the tracks you should be on, which streets don’t perform well and even what size property appeals to the demographic in the area. They’re typically very sensitive to pricing on rentals and the wrong features can have a big impact on what rent is achieved.
I also like property managers because they typically have no vested interest in telling you about the suburb. You can’t say that for sales agents, where no doubt every street in the suburb is paved with gold and you’d be crazy not to buy there. Talking to property managers will also give you a good idea of who to give your investment to when you do end up buying in the area.
So if you’re looking to expand your portfolio with some quality interstate investments, make sure you understand the numbers before you dive in, get a handle on what the locals do to get a deal across the line and get a little local knowledge from professionals who know the area. Get this under your belt and you’re well on your way to securing a great property.
WRITTEN BY JOSH MASTERS