How comfortable are you with interstate investing?

Discussion in 'Investment Strategy' started by Serveman, 7th Oct, 2019.

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  1. Serveman

    Serveman Well-Known Member

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    Obviously these days with the advent of the internet many people have access to investing in properties located in another state from where they live. Some of the advantages that I read about and listen to podcasts include:
    1. You can access markets that are in the right part of the cycle
    2. You can spread the risk of your portfolio against downturns
    3. Reduce your land tax burdon
    4. You can have access to more affordable markets that reduce the amount of cash that you have to contribute

    The disadvantages as I see it:
    1. Its harder to manage the property. I have heard of many people being charged a premium to make repairs and maintenance.
    2. It requiries a lot of research to make sure you get the right suburb, street and house and then you have to go and travel to the destination which is fine if you have a lot of time but can be difficult if you are limited.

    There are many people that advocate borderless investing (Especially buyers agents), but quite a few have also been successful in only investing in their backyard.
    Interesting to hear how comfortable people are with these two options.
     
  2. Trainee

    Trainee Well-Known Member

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    Even when buying ppor, never went down to street level research. Was happy to look in a group of suburbs. Wouldnt even need that for ip.
     
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  3. Serveman

    Serveman Well-Known Member

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  4. larrylarry

    larrylarry Well-Known Member

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    I flew to melbourne twice to look at a specific area and its surrounds before I took the plunge, and that's after months of research. found a PM to manage and it has been great experience.
     
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  5. Willy

    Willy Well-Known Member

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    If buying interstate means you need to use a BA then the cost of a BA is a small price to pay to have your risk spread over different states and markets. $10k for a BA is nothing compared to concentrating your risk in your own backyard.

    Willy
     
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  6. D.T.

    D.T. Specialist Property Manager Business Member

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    Having properties across multiple states has meant i dont have big land tax bills, but also some can go good while others bad and vice versa.

    And there's generally someone who'll look at a property for you ;)
     
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  7. Sackie

    Sackie Well-Known Member Premium Member

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    For me the idea of only investing in your backyard is like only investing in 1 sector of the share market and ignoring all the rest. It's very risky and at some point your market will be flat or declining while others show good opportunities.

    Some ppl only ever invested in Adelaide or Perth or wherever. I'm sure they're now pausing to wonder if they missed some great opportunities elsewhere. Even those who only invest in Sydney or Melbourne will miss out on other good opportunities elsewhere.

    I'm not a fan of limiting yourself to only one market. As long as you know how to conduct thorough DD, then the whole of Australia should be available to you.
     
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  8. Dan Wood

    Dan Wood Well-Known Member

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    I have a similar story except I flew once and to Brisbane. I'm in Sydney.

    I'll be honest it makes no difference where it is, buying an IP is business at the end of the day.
     
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  9. datto

    datto Well-Known Member

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    I don't feel comfortable investing in suburbs that are more than 20km away let alone interstate.

    Relying on interstate PMs and tradies would drive me batty. I mean more batty lol.
     
    Last edited: 7th Oct, 2019
  10. Shogun

    Shogun Well-Known Member

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    So like a 20km radius around Rooty Hill RSL?
     
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  11. datto

    datto Well-Known Member

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    Yes. This stops cab fares getting out of hand and prevents having to do "runners".
     
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  12. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    ......and who says you have to be "comfortable" anyway? It is never going to be comfortable the first time you attempt to do anything outside your comfort zone. I don't know who first said it, but I like the moto: Do It Afraid.
     
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  13. Skinman

    Skinman Well-Known Member

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    No problem with interstate investment. I only have one IP in WA the rest of my portfolio is interstate (thank goodness!)

    Never seen most of them just rely on a team of professionals (no buyers agents used).

    Good PM’s look after R&M I take an active interest in keeping across what’s going on and monitoring things (probably a little too much for some of my PMs liking :D)

    As mentioned it helps reduce land tax cost and diversifies the investment across different markets and balances CF v CG in line with my strategy.

    Finally it’s good fun and gives me a thrill while I can still sleep easy at night.
     
    Last edited: 8th Oct, 2019
  14. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    I am skeptical of inter-state investing, but I think it largely depends on where you live as to whether going far afield makes sense.

    Real estate is just that - it is real estate - ie a physical asset. If you are not in a position to see it and touch it, it turns a physical asset into something abstract. The value of real estate is in its tangibility.

    Also, the thought of doing an inter-state renovation (inevitable within real estate) sounds horrible.

    I know that this is also going to ruffle some feathers, but from what i can see, much of the benefits of inter state investing is that it allows investors to chase cheaper properties. But is this a desirable strategy? Investing inter-state into Logan for example has not been a winning strategy, where as a Sydney-only or Melbourne-only strategy has been a very successful one.

    If you live in Sydney and Melbourne, these are massive cities with lots of diversity and many economic drivers, and I would be surprised if you couldn't get the same level of diversity from these two cities alone.

    The desire to lower land tax the best argument I can see in favour of inter state investing. The other benefits seem less obvious when you balance them out with the risks.

    Over to you..
     
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  15. Sackie

    Sackie Well-Known Member Premium Member

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    Don't be.

    My portfolio acro$$ 4 states and overseas would beg to differ. :p
     
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  16. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Have you had to renovate any of these yet? How did that go, and how did you coordinate it?
     
  17. Mumbai

    Mumbai Well-Known Member

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    Bought an interstate property 5 years ago without physically inspecting. Viewed it a few years after buying. It is one of my best looking, lowest maintenance properties and has one of the best tenants you could ask for.
     
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  18. Skinman

    Skinman Well-Known Member

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    Good PMs will coordinate and manage a renovation for a reasonable fee. If it’s just a paint job and carpets they will do it for very little. A more structural type reno they may charge a %fee upto around 10%.
     
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  19. Sackie

    Sackie Well-Known Member Premium Member

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    I have renovated both locally and on ips I've never seen physically. The ones locally I coordinated. The ones away from me I had investor friends who lived in the area help me out. Was never a big deal really. TBH I think once you can buy a 1mil site unseen while overseas holidaying, nothing really phases you after that.
     
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  20. Skinman

    Skinman Well-Known Member

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    I get what you are saying about not seeing it but that’s why I used a trusted team of professionals. A good PM who will do some leg work and attend opens on my behalf. The most anal B&P inspectors known to mankind etc. etc.