How to Buy an Interstate Property
I’m always a really strong advocate that property investors should be buying outside of their own backyard if their city or their state isn’t in the right part of the property cycle right now. So that’s what we call a Borderless Investor but it’s important that people don’t just flippantly buy a property interstate because there are lots of things you need to consider.
And so my first tip to anyone who is considering buying interstate is to never buy a property sight unseen. If you don’t have a Buyers Agent that is actually helping you buy and you’re doing it all on your own, in my view that is just fraught with danger because we always know that the real estate agent is putting the property in its best light. They are making the camera angle look at it from its best quite often wide angle lenses and there is lots of marketing principles that are going into play to really put the best foot forward for that property. But its not until you actually get there or its not until you’ve got a representative on the ground who is there who can actually tell you that it’s in the shadow of a big apartment tower or there is a train line across the road or something that you didn’t quite expect is in place. For me, making sure that you don’t buy a property sight unseen is the no.1 rule.
My second one is understand the local conditions for negotiating. So for example, in Sydney and in Melbourne, really strong auction states, quite often you’re buying under auction conditions or in Sydney for example, if you want to buy a property private or take it off the market before auction, you need to sign the 66W which waives your cooling off rights so in those bigger cities, it’s really fast paced. But if you’re in Brisbane, Perth or other cities for example, you can make the contract subject to finance, subject to building and pest. So it’s important that you understand these local conditions for negotiating before you start buying because if you are used to buying in Brisbane and think that you get a building and pest inspection done after auction for example in Melbourne, you are going to be really really disappointed. So that’s my number 2 tip. Make sure you know the local condition for negotiating.
Number 3 is make sure you got the network set up in advance because you going to need a solicitor/conveyancer, you are going to need a building and pest inspection done, you are going to need to have a property manager once you’ve find a property. It’s important that these key people are thought about and put into your team in advance, not after you’ve bought the property because what we do know is that the adrenaline is up and the anxiety is up once we’re buying these properties and we don’t want to add any stress layers by not having these things organised in advance. So my third tip is have your network in place prior to looking to buying things interstate.
The other thing is don’t assume that what works in your backyard would actually work in another market’s backyard. So the obvious one I can think about is using Melbourne and Sydney again, if you are in a suburb that is close to a train, that is a real strength right? It’s just an unbelievable positive because the city is so dense. But recently I was in Adelaide talking to arguably one of the most informed people in the South Australian market and I’ve talked on what about the proximity on the train and he just look at me and he goes, “It doesn’t matter in Adelaide. You can just try your car and where ever you need to go, you would probably find a car park out at the front.” So it’s not as critical in that market as it is in other market. So it’s important that you understand this. In some market, you can buy an apartment or a flat as they would call it and in other market, it just doesn’t make sense. So understand what makes for a good investment and what’s a normal within a market. Don’t just assume that the same thing apply as to what’s in your market.
My fifth tip is largely around the best source of information that you can get, in my view, is talking to a property manager. Let’s assume that I’m buying a property two states away and it’s in a suburb and I just need to do the last bit of my due diligence. Get on the phone to either your property manager or a trusted property manager and ask them some questions because they’ve got no sales agenda. In fact, they are going to inherit your property once you’ve settled and they are going to inherit any problems that might exist from it so they are going to be very very frank about what the local conditions are like and whether or not that property is likely to rent in that market.
So there, I guess are, few of the tips that I recommend that anyone who is considering of being a borderless investor should cover. Never buy a sight unseen, understand the local conditions for negotiating, have your network lined up prior to buying, don’t assume what works in your backyard is going to work in another backyard and take some advice from a property manager. If you do those five things, chances are, the experience of buying interstate will be a stress free and rewarding experience.