We are all creatures of habit, we are comfortable with what we know and very fearful of change.
When it comes to investing in property, I am yet to meet an investor who from the outset is not keen to invest in their “own backyard”. They are used to a location they believe they know well.
Is this the right approach? Well in a word…no.
Why Many Are Reluctant To Invest Interstate
We seem to get stuck on the “unknown” factor particularly when looking interstate. We have no issues investing in a volatile share portfolio without visiting or seeing the research or development team.
However, when it comes to a property we want to be able to see it, touch it, be close to it and its tenants when in reality, there are very capable professionals to do all that is needed.
Diversified Portfolio
For a start, a good investment portfolio is a diversified one, one where you don’t have all your eggs in one basket. Each state in Australia has a property cycle that moves at different rates and different times. So, when one state is in a danger period, another could be in the growth phase.
To read more about the key factors required for a diversified portfolio click here.
Threshold on Land Cost
Additionally, there is a threshold on the land cost before land tax needs to be paid. As the property portfolio grows, so does the land cost and once the threshold is reached, many would be surprised by how much lax tax would apply.
Why Do Investors Fail When Investing Interstate?
There are many criteria required for a strong property investment and generally, investors will not have the time to conduct thorough due diligence, so where would you start?
Many aspects come into the mix such as:
Analysis of the local market and suburb
The vendors and builders capability
Strong local property managers
And more!
Once again, all roads point to reliable analysis and trusted research. The best property investment is one that should perform in terms of capital growth and yield, it should be affordable, serviceable and diversified.
As I always say, let the research and the numbers do all the talking.
I hope you found this article useful for your knowledge as a property investor. Make sure you stay up-to-date with the Property Market by joining our Weekly Property Market Pulse Newsletter here.
Warren Jacobs - Senior Property Investment Consultant at Meridian Australia
P: (02) 9939 3249
Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your individual circumstance.
Comments