Guide to buying an investment property interstate

Buying an investment property in another state can offer great benefits like tax advantages, higher rental demand, better capital growth, and future development opportunities. It’s also a good way to diversify your investment portfolio. 

Choosing a suitable property in an unfamiliar location presents its own challenges. To help you out, here are some key tips for buying an investment property interstate: 

Research the area 

First and foremost, you need to be knowledgeable about the place you’re going to invest in. Understand the real estate market trends of individual suburbs, not just the general area. Remember, the location and the land can provide just as much value as the house or unit itself. 

Due to the distances involved, it is not financially viable to inspect multiple suburbs and properties across state lines. Instead, you can focus on research that includes metrics such as price, rental yield, capital growth, and demographics. A suburb report can be useful for this, as it provides important market data that can help you make more informed decisions. 

When you narrow down your focus to a specific suburb or even property, make sure you research the surrounding area, such as schools, shops, restaurants, parks, as well as access to getting around, like public transport. These factors can significantly influence the growth potential of the suburb and, subsequently, the value growth. 

Know what you want 

Before you even start your investment property search, keep the following in mind so you don’t waste precious time looking at listings: 

• Location – It’s a good idea to invest in an area that suits the needs of potential tenants and their lifestyle. Close to centres of work, public transport, schools and shops are typically ideal.
• House or unit – What type of property do you want to buy? Most people prefer to live in a free-standing house, but as investment properties, apartments have many advantages. They are generally more affordable, low-maintenance, and much less expensive to refurbish.
• Established property or new build - Building a new house or buying an apartment off the plan is an option for investment. If you decide to build, consider a construction loan, which is designed specifically for people building a house or unit. 

Investing in a property located in another state or territory can be time-consuming. You don’t want to spend days or weeks aimlessly browsing through house after house, or unit after unit. It’s important to have a clear goal in mind so you can tailor your investment strategy to it. 

Learn about the different state fees 

Since you’re going into possibly uncharted territory, you need to familiarise yourself with the taxes, as well as the costs and fees associated with buying an investment property in another state. 

When you buy an investment property, you’ll have to pay stamp duty. The rules associated with stamp duty costs vary per state. You can use an online stamp duty calculator to get an idea of how much it will cost before you start your investment property search in earnest. However, it’s still best to consult with a real estate or tax professional to get a more accurate duty cost estimate. 

Get help from the experts 

Part of investing in a property is managing the asset. Doing so thousands of kilometres away from home is especially difficult. Consider hiring professionals to help you purchase the property and manage it. 

During your property search, consider hiring a buyer’s agent to help you find the best listings that meet your budget. They could also negotiate the price on your behalf or bid at an auction. They’ll be able to take care of the buying process while keeping you informed, even if you’re a few states away. 

Hiring a conveyancer can also be helpful. They can tell you the rates of stamp duty and other costs in the local area. 

 If you’re renting out the property, think about how you’ll manage it. Due to the location, it will be very challenging if you attempt to take care of the property by yourself. Look into property management services and factor the fees into your budget.

Hiring professionals can ensure a smooth and hassle-free process without travelling interstate. 

Schedule a physical inspection 

If you’ve already found a property that you’d like to buy, it’s time to schedule a physical inspection. It’s probably not possible to visit every property you’re interested in, but when you’re ready to buy, it's better to take time and see it for yourself.  

For those who can’t do an on-site visit, you could set up a virtual tour or employ someone you trust to inspect the property on your behalf. Having a professional building and pest inspector do a pre-purchase inspection could also be beneficial.  

Find a good investment home loan 

When buying an investment property interstate, you need a good investment home loan. Securing financing is one of the most important parts of an investment property purchase. If you have a pre-approved investment home loan, it could make your property search much easier and give you more confidence at the negotiating table. 

The ideal investment home loan has good, competitive rates with useful features that can help you save money and pay off the loan faster. To learn about your investment finance options, get in touch with our friendly lending specialists at loans.com.au. 

Call us today at 1300 475 648 or apply online to get started! 

Please note this content is not intended to constitute financial advice and should not be relied upon as the basis for any investment decision. We recommend seeking your own professional advice tailored to your individual financial circumstances.

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