Are you considering buying property interstate but don’t know where to begin?

It’s a great way to diversify your property portfolio but how do you avoid the hidden mistakes and ensure you don’t miss out on golden opportunities.

Do your homework

Firstly, don’t assume what determines property prices in your area will work everywhere; there isn’t just one Australian real estate market.

You’ll need to do your due diligence by researching historical prices, rental yields, future development plans for the area and more.

You’ll also want to look at growth drivers such as:

  • Affordability.
  • Infrastructure investment.
  • Other urban growth investment.
  • Employment opportunities.
  • Population growth.
  • Tourism forecasts.

Visit the area

There is no substitute for visiting the area and walking through the property yourself. Online real estate listings can often be misleading.

Visit the area, speak with the locals and find out what development plans were voted on recently in council records (they should be publicly available).

To use your time wisely, you’ll also want to line your trip up with open houses that have been scheduled for inspection. Go to as many prospective properties as you can.

For example, buying in Sydney is a lot more fast-paced with almost auction-like conditions.

In some parts of Brisbane or Perth, vendors tend to be a little more flexible; you’ll have greater power to negotiate for a subject to finance contract or subject to building and pest inspection contract.

While it may not be possible for you to visit every property you’re interested in, you may want to hire a buyer’s agent that can provide you with expert knowledge, insights on the area and access to off-the-market/unlisted properties.

Pro tip: You may be able to claim the costs of travelling as a property investment expense come tax time.

Check out the negative gearing page for more information and consult an accountant that has experience in property investment.

Assemble your team of experts

A buyer’s agent

A buyer’s agent can be an invaluable asset when buying property interstate.

They can help you purchase a great property in a hyper-competitive Australian real estate market.

Although their fees can range between a few thousand to up to $15,000 for most homes and more for premium properties, they can help you avoid the common pitfalls of buying property interstate and make the process a lot easier to manage.

Pro tip: Beware of two-tier property marketing, where there’s one price for locals and another for people from interstate or overseas. South East QLD is well known for this.

To avoid paying a premium over market price:

  • Do your research and identify if the area you’re buying in has two-tier property marketing.
  • Even if they don’t, compare similar properties in the area in order to go hard in negotiations.
  • Avoid these properties altogether.
  • Leverage a buyer’s agents’ knowledge and skills when buying property interstate.
  • Know when to walk away.

A local solicitor or conveyancer

Beware of the conveyancing differences when buying property interstate.

Take the differences between NSW and QLD as an example:

  • In New South Wales, both solicitors and conveyancers are allowed to perform property transactions, which is not the case in Queensland, where only a registered solicitor can handle property transfers.
  • Unlike QLD, if a party fails to settle on the settlement date in NSW, the other party cannot immediately terminate the contract. A standard 14 days ‘notice to complete’ must be served to the other party; it is only after this notice has been issued that the contract can be terminated.
  • In QLD, most contracts are subject to finance and/or the building and pest report. In NSW there are no standard building inspection or finance clauses except for certain disclosure obligations from the vendor.

There are other legal requirements and they differ significantly from state to state in regards to stamp duty, Contract of Sale, property tax etc. when buying property interstate.

We recommend hiring a conveyancer that is experienced in handling conveyancing and property matters in the state you’re buying in.

Pro tip: Land Tax can be reduced by purchasing properties in different states rather than all in one state. Each state has its own regulations.

For example, in NSW, your tax is based on the cumulative value of the properties you purchase.

However, if your purchases are spread between VIC, QLD and NSW, the properties are taxed individually at a lower rate.

A good property manager

You’ll want to make sure that you talk to your property manager and ask for their unbiased opinion on the property’s condition, attractiveness to tenants, vacancy rate, the full cost of maintenance, management etc.

Ultimately, it will be the property manager who’ll be handling the day to day of your investment property and If something is off about the property, a good property manager will tell you upfront.

Pro-tip: Choose a property manager with experience that isn’t managing too many properties.

Typically, a property manager managing more than 150 properties won’t be able to provide personalised service and attention that you need when buying interstate.

An expert mortgage broker

Getting a home loan pre-approval is the very first step when buying property interstate.

The approval criteria for investment loans are quite complicated especially if negative gearing benefits are required to prove that you can afford the loan.

A specialist mortgage broker can help you navigate lending policy on postcode restrictions, loan to value ratio and negative gearing benefits to maximise your borrowing power.

The property type and property titles also vary from state to state which can ultimately determine your chances at approval.

We can also order a free upfront valuation on the property and that will often spot problems with the property if there are any.

Consider the drawbacks of buying interstate

After you’ve gone through the gamut, considered the risks and weighed the benefits, it’s time to do the math.

Find out exactly what your funds to complete will be and what your weekly cash flow will look like.

It is likely that your investment property will be negatively-geared initially.

Carefully consider your cash flow to ensure you’ll have enough liquidity to cover shortfalls and your mortgage repayments.

Fnd out if you qualify for an investment loan

A lot of investors are buying property interstate as the properties in their own locations are not performing well or the higher entry price is locking them out of the market.

Doing your due diligence and research when buying an investment property interstate can help you minimise your risks and maximise your returns.

Give us a call on 1300 889 743 or fill in our online assessment form to find out if you qualify for an investment loan.

Why use us?

We aim to set an example by delivering what we promise: a higher level of service, better advice and better home loans.

pin_drop

Australia-wide services

We finance properties anywhere in Australia for people anywhere in the world.

monetization_on

Get incredible interest rates

Our relationships with our panel of lenders allow us to negotiate your interest rate.

thumb_up

We get tough loans approved

We can help you navigate the often complex pre-approval and application process.

favorite

Our customers love us

We receive hundreds of love letters from our customers.

Discover more reasons to use Home Loan Experts

How we find you the right solution

We get a complete understanding of where you’re at and what your ultimate goals are.
You’ll get a recommendation in just a few simple steps.

enquiry form icon
1

Complete our free assessment form or call us.

lender search icon
2

We assess your situation.

panel of lenders icon
3

We look at al the options from our panel of lenders.

recommended deal icon
4

We will find you the most suitable home loan deals.

Testimonials for Home loan experts

google logo white

4.7

from 200+ reviews
facebook logo white

4.7

from 300+ reviews
product review logo white

4.8

from 500+ reviews

Facts
about us

30+

lenders on
our panel

$4B+

lent Australia-wide
and counting

Westpac Logo
ANZ Logo
NAB Logo
AMP Logo
Adelaide Bank
Firstmac Logo
CommonwealthBank Logo
St.george Logo
ING logo
Homeloans Logo
Macquare bank logo
Suncorp logo
pepper money logo
mebank logo
bankwest logo
75%

of our borrowers get
approved with a major bank

95%

of our borrowers get a discount
below the bank standard variable rate