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Investing Interstate: where to start?

Discussion in 'Where to Buy' started by Luca, 8th Feb, 2016.

  1. Luca

    Luca Well-Known Member

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    Hi guys,

    Considering the prices are too high at the moment here in Melbourne (well, for my budget), I am looking to opportunities interstate, e.g. Brisbane and Adelaide.

    Never bought an IP even less interstate.

    What are your best tips?

    · I think first of all you need to build a team: property investment advisor, buyer`s agent, tax advisor and property manager.
    · Do your own research
    · Have a look in person
    · Forecast costs and understand if it`s really worth it

    I am just wandering if, considering all the additional costs you don`t have if you buy in your home town, it`s really worth it. Do you know roughly how much the professionals listed above charge? I know management fee is usually 8%.

    Thanks :)
     
  2. Bran

    Bran Well-Known Member

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    Propertychat

    What's a property investment advisor? You don't need one of these.
     
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  3. D.T.

    D.T. Adelaide Property Manager Business Member

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  4. Luca

    Luca Well-Known Member

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    @Bran Professional who guide you through the selection of the best areas to buy for your type of investment

    @D.T. thanks, I will have a look now
     
  5. Bran

    Bran Well-Known Member

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    Yah, you still don't need one. But some buyer's agents will do this. Even with a BA, I'd still like to know roughly where i want to buy, and why.
     
  6. JacM

    JacM VIC Buyer's Agent Business Member

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    Hi @Luca

    A bit of an idea of likely fees for you are;

    Mortgage broker
    • Normally you do not get charged a fee at all by a mortgage broker. A mortgage broker is usually remunerated by means of trail commissions from the lender that you are placed with. This does not mean you pay extra mortgage interest on your loan. Think of it more as the bank preferring to use independent brokers to do the hard yakka of writing loans, rather than taking on a permanent staff member and paying them superannuation, WorkCover insurance premiums, a seat and a desk for them to sit at with a computer, overhead lighting and so on, and ongoing training costs and all the other things that come with a permanent employee.
    • Some brokers may charge a fee for a consultation or for a mortgage pre-approval submission.

    Buyer's agent
    • Some will charge a flat-rate and some will do a percentage-based fee. The details regarding the service offered can differ between agents. 8% is very steep.

    Tax advisor
    • The fee is going to depend on what you are wanting them to advise you on.
    • It is important to understand your tax accountant cannot advise you on where to buy or how much you can borrow. They can advise on how your tax position would look if you purchased a property of a certain price, with a certain amount of rent, with a certain size mortgage, and can also comment on how this would look different if purchased in your own name versus family trust versus self-managed super fund etc.
    • If you desire tax advice before purchasing, your tax accountant will probably be happy to comment on the likely cost of the consultation if you tell them the agenda for the meeting.

    Property manager

    • Fees charged will be area dependent, and also it will depend on how many properties you have with the one agency.
    • Typically you could be paying anywhere between 5.5% and 8.5% of rent collected as the ongoing management fee.
    • There will also be other fees. For instance, if the property needs to be advertised for a new tenant, there will be a "leasing fee" which is normally between 1 and 1.5 week's rent plus GST. With any letting there is often also an advertising fee to cover the cost of the rental ad listing on the real estate websites.

    If you feel you are priced out of the Melbourne market and are looking interstate, try to compare apples with apples. For instance you might be priced out of Melbourne suburbs that are close to the city and not those further out. You might decide to purchase in a small regional area hours from a capital city interstate. It would be easier to rationalise what something say 30mins from Melbourne costs versus the same sort of dwelling 30mins from another capital city.

    Hope this clears things up a bit. :)
     
    Last edited: 10th Feb, 2016
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  7. Luca

    Luca Well-Known Member

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    Thanks Jacqui, really detailed answer. I`ll do a bit of research first and then decide which way to go. I guess the accountant is the most important!
     
  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Actually your finance broker is more important imo.
     
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  9. Luca

    Luca Well-Known Member

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    Thanks, yes it is too...
     
  10. Nemo30

    Nemo30 Well-Known Member

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    If I was buying in Adelaide I would definitely have a chat to @Corey Batt . He's a great mortgage broker located in Adelaide. Can't recommend highly enough. He would be my first port of call so you can ascertain your budget.

    Also consider the interstate property inspections @D.T. Conducts in Adelaide - essentially he will go to the open for inspection and do you a report so you don't have to fly over. It's pretty cheap too.
     
    Last edited: 9th Feb, 2016
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  11. Nemo30

    Nemo30 Well-Known Member

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    You mention management fees are usually 8%. Just be aware that this can vary widely. In some parts of Aust over 10% could be norm (thinking WA). Best to get some quotes from a number of agencies in the area you buy your property and then compare what you get for that price. Be aware that you are not always comparing apples with apples. Some might have a low base price but have additional monthly costs for statements, inspections etc.

    Also, price shouldn't be the sole deciding factor... You want someone who is going to work for you and do a good job. Once you buy your property seek some recommendations from others who have properties in the area.
     
  12. Luca

    Luca Well-Known Member

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    @Nemo30 thanks for the contacts and tips, I`ll let you know how I go. Luca
     
  13. Nemo30

    Nemo30 Well-Known Member

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    Good luck!

    The first one is exciting!

    Once you have an idea of what you're looking for, ask lots of questions - people here are very helpful.
    Do lots of searching and post links to properties and ask questions so you can narrow down what you're looking for.

    But be careful not to post links to properties you are genuinely interested in buying because someone else might swoop in and buy it after seeing your link.

    Also, look at the numbers and how you will make money on it rather than getting emotionally attached to a house.
     
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  14. Luca

    Luca Well-Known Member

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    @Nemo30 thanks. At the moment what scares me is not being in the same city. It looks like it is really hard to find a good property manager if you don`t have connections. Luca
     
  15. Nemo30

    Nemo30 Well-Known Member

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    I wouldn't worry. You have a forum full of people that you can draw on. Loads of experience here.

    If you feel comfortable buying close to home for the first one, that's ok too. But really buying interstate is no different. I have a couple of properties in the same suburb I live in and until recently I hadn't seen them in years.

    I think choosing the right property, and knowing how it's going to work for you, is the most important thing. Don't buy for the sake of buying.

    Other things like a dud property manager can always be changed.

     
  16. Bran

    Bran Well-Known Member

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    Why exclude Melbourne if you are just starting out? Some are still touting parts of Melbourne as room to grow. The whole city can't be painted with one brush, and nor can Brisbane's long-predicted rise be extrapolated to every house in every suburb.

    Brisbane's not galloping away, and from the theme of your first few posts, I think you will get loads out of some reading (books and forum).
     
  17. Luca

    Luca Well-Known Member

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    Thanks Bran, I will look further into Melbourne but I lost my hopes...
     
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  18. ellejay

    ellejay Well-Known Member

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    There are a lot of very genuine people on the forum who will advise you. Get some recommendations on good brokers as a starting point. I agree with @ Nemo that Corey would be a good bet. There are some great buying options in any of the cities you mentioned. I don't know what your budget is but those who know the areas well will be able to advise on areas with low vacancy rates and particular properties on the market. Have a good read of the Adelaide threads and pick DT's brains for more info.

    A few of us here have IPs that aren't even in this country. Most things are done by remotely these days so I certainly wouldn't let it put me off. Do what you have to do to make it work for you financially. Plus you can get a tax deductable holiday in Adelaide or Brissy to check out your IP. Even more reason to go interstate.
     
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  19. Perthguy

    Perthguy Well-Known Member

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    I live in Perth and me and my partner bought an IP in Melbourne which we then self managed. We just pay an agent to find tenants, a leasing only service.

    In terms of team, I had a finance broker and tax advisor. But I am very good at finding properties so I didn't need help with that.
     
  20. Luca

    Luca Well-Known Member

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    Thanks guys, everyone recommends a broker. Do you reckon it is really important? What is the real + you can get from them? The advice or a better rate on the mortgage? Reading here and there the ate will be equal if not more than what you get dealing directly with the banks.