Buying interstate during a pandemic / lockdown (process / how-to)

Discussion in 'The Buying & Selling Process' started by craigc, 5th Dec, 2020.

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  1. craigc

    craigc Well-Known Member

    Joined:
    25th Jun, 2016
    Posts:
    1,576
    Location:
    Melbourne
    Perhaps it’s just me but I have noted a number of posts from people asking about buying interstate or local whilst in the pandemic.

    This is more about the process /mindset than where to buy as everyone’s circumstances and distance along their investing journey are different but I’ve covered my personal situation & criteria below.

    Circumstances: For our personal circumstances & portfolio the goal was to search for a high yielding IP to be purchased in low/no income partner’s name. Have multiple properties in Melbourne market (PPOR & lower yield IPs). Plan for long term hold as a risk offset to shares (decided pre pandemic) with good exposure to shares through superannuation. Secure job important as not all being so fortunate.

    Mindset: After a long time waiting for lending (>12 months) finally obtained Success through broker in some cash out to complete deposit and the loan approval. This was completed late June / early July as Vic went into tight lockdown (couldn’t travel more than 5km from home) and many interstate borders were closed.
    Some PC posters were concerned about the end of job-keeper, end of bank repayment holidays & rental moratoriums, To me that is an opportunity as comfortable to back property long-term with a secure job & not concerned even if it did get it wrong & it did drop 5-10% from purchase price. Comfortable to ignore doomsayers of 20 - 40% drops as unrealistic.

    Purchase area: L-T hold / high-yield & land tax meant Vic was out. Target then became Brisbane or Adelaide with low purchase capacity and was keen to stay closer to the ‘big smoke’ than too regional.
    Main reason choice of PM’s, trades etc than regional. This is of course giving up a little in yield v regional. As number 3 city & lots lower stamp duties, prospects (imho), greater Brisbane became the L-T target.

    Process / areas: Speaking to a number of BAs sounded promising and if it didn’t work out myself would invest the funds (between $8-12k) to assist.
    Target was on regions allowing GF addition (re L-T yield play above) meant Ipswich, MB and Logan councils. Ipswich first out due to reactive soil risks & I consider closer to coast a L-T benefit over inland. MB a lot of hype about the new uni but also higher buy-in prices and slightly lower yields.
    Logan ends up being the choice and although a stigma do lots of research and avoid the bottom of lower socio area headaches (Woodridge / Central etc). Looking for corner blocks or big rear yards for less than $350k.

    Property purchase: After trying hard to work on a property in Slacks Creek that met the purchase criteria, the vendor didn’t want to budge & is still holding out for their price (afaik). Multiple properties considered & discussed with agents & ended up further moved further down the freeway Towards GC. With huge thanks to @Tom Rivera for doing some walk through inspections & providing valuable advice, some more were eliminated before being advised by agent of one coming to market soon. Not great condition, owners need to sell and tenants not presenting it well. Sounds promising.
    Walk through (again remote video with Tom) slightly cleaner than agents expected as tenants had family in to tidy up a bit.
    Needless to say Tom’s the PM as they are one of the most important people going forward.
    Checked council overlays (very easy compared to Victoria process), microburbs for low socio HC (clear), flood maps, street view checks etc all met acceptable criteria.

    Figures: Offered $35k under $340k asking with subject to conditions. Agreed at $27.5 under then knocked another $4.5K off under B&P report.
    Main house (tired) currently rented at $380 week with a large flat yard with good side access to add the GF. Expected GF rental $310-$320 week. Build cost $140k turnkey with some upgrades, fencing, driveway for L-T appeal and approx $8k in council fees.
    Have also allowed around $20k for various repairs / fixes required to main residence as we go along as previous owner didn’t spend the money to upkeep the property.

    Summary:
    Sorry for the long post, this is not to say this process / purchase criteria will suit everyone & I have zero intention of becoming BA or MB etc so no hidden intentions, but this may be a few tips to help some who want to do it themselves in challenging circumstances.

    This was purchased in July and settled August but since then borders are beginning to reopen and allow more travel so hopefully people can be able to travel safely (with reduced Corona risk) and be able to inspect in person to further check things out on the ground.

    Good luck to all in your investment journey.
     
    Last edited: 5th Dec, 2020
    DOSHman, Sackie and Tom Rivera like this.