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Guide to buying an investment property interstate

When buying an investment property most people look close to home because they are comfortable with the area, know it well, and can easily inspect and manage the property. 

While this makes sense, they are limiting their options to invest in other areas that may have higher potential growth and rental demand.  

Diversifying is a popular way to add security to your portfolio.

Thankfully, there are a number of ways that you can buy an investment property interstate. Here’s what you need to consider before buying interstate:

Research the area

Because of the distances involved it is not financially viable to inspect a large number of areas and properties interstate. Instead, you can focus on research that includes metrics such as price, rental yield growth and capital growth.

You should also find out about the area's population growth, demographics and employment levels so you know who your rental market is. 

At loans.com.au we also provide free property reports.

The report will include extensive information about the property you are planning to buy or sell from market-leading property research company Core Logic. These reports are the most reliable source of information when looking to purchase a property or learn about a local property market.

Each report includes an estimated price range for the property, recent sale prices for similar properties in the area, details of nearby properties that are on the market, information on the suburb’s performance and a suburb profile.

When you narrow down your focus to a specific suburb or even property, make sure you research what is in that area such as schools, shops, restaurants, parks, as well as access getting around like public transport.

These factors will also influence the growth in the suburb and subsequently the growth in value.

Remember the area and the land can provide just as much value as the house or unit itself.

Have a strategy

Before any big purchase, it’s important to understand your goals.

If you’re planning to purchase an investment property to rent out to tenants, no matter whether it’s your first investment property or your next, we can help.

You need to address the following before you buy:

Location – Where do you want to buy? Ideally you’ll want to buy in an area that suits the needs of potential tenants and their lifestyle. Close to centres of work, public transport, schools and shops.

House or unit – What do you want to buy? Most people ultimately want to live in a free-standing house but as investment properties, apartments have many advantages. They are significantly cheaper, low maintenance, and much less expensive to refurbish. Whichever way you jump, you will need to decide between house and apartment before you start looking.

Do you want to build a new dwelling - Building a new house or buying an apartment off the plan is an option for investment. If you decide to build, you will want to consider a Construction Loan which is designed specifically for people building a house or unit.

State by state fees

If you are looking to buy interstate, you may not be aware of the taxes, costs and fees associated with another state.

Buying a property means you’ll have to pay stamp duty.

Useful tool: Stamp Duty - A state by state guide.

Use our stamp duty calculator to see how much you can expect to pay in each state and territory.

You also will need to decide on what you can realistically afford, taking into consideration stamp duty and fees, as well as the price of the property.

Use our borrowing power calculator to see how much you are able to get as a lender with loans.com.au

Hire a professional

Part of investing in a property is managing the asset. Doing so thousands of kilometres away from home is especially difficult. To help you out, you can hire professionals including:

  • A buyer’s agent: They can help you search for properties that meet your budget and also negotiate price on your behalf or bid at auction.

  • A conveyancer: Hire a conveyancer early and they can tell you the rates of stamp duty and other costs in the local area.

  • A property manager: They will be the one to manage the property on your behalf. This includes finding tenants, handling complaints, collecting rent and evicting bad tenants.

Hiring professional help can ensure a smooth and hassle-free process without you needing to travel interstate.

Physical inspection

You may not be able to physically inspect the properties you are interested in. This needs to be something you consider and plan for.

You need to set up a virtual tour, or employ someone you trust to inspect the property.

Make sure this person understands your goals and expectations.

If you do travel to inspect it yourself, you may be able to claim the costs of travelling to view the property.

Make sure you speak to a tax professional to get the right advice about any possible tax deductions on your investment property.

Don’t buy with your heart

Keep a practical mindset. Some investors pick out a location because of they have fond memories or want to invest in a holiday home and would like to eventually retire there someday. However, you need to keep in mind that you’re buying for investment purposes.

If the area has a high vacancy rate like many holiday towns, steer clear. You should focus your attention on locations that are likely to experience capital or rental growth not on personal favourites.

If you are ready to get started, or want to find out more about buying interstate, chat to one of our lending specialists today.

Get pre-approved

Other helpful resources:

How to make good return on an investment property
How much deposit do you need to buy an investment property?
Investment Property Loans

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.