Buying a property investment in another town or city can help you tap into lucrative markets, but what are the downsides ?

The old saying of ‘don’t put all of your eggs in one basket’ is just one of the reasons why it’s worth considering investing in an area you don’t live in – whether that be another town or city, or – as is often the case – interstate.

Managing director of Property Buyer Rich Harvey often advises clients to look in other states. Harvey, who is based in Sydney, currently favours Queensland as an over-the-border option.

‘The reason you buy intestate is you want diversification, you want to have a portfolio in different states, so you’re catching the property cycle,’ Harvey says.

‘Another reason is to minimise land tax because you’re going to hit the land tax threshold pretty quickly, especially in NSW. You know, $417,000 in land [value], you’re certainly going to exceed that pretty quickly.’

Harvey says concerns about being an ‘absent landlord’ who lives too far away from their property are usually unfounded. ‘Even when you’ve got a property on the other side of Sydney, it can take you an hour to get there, so it’s [almost] no different to having a property in Brisbane,’ he says.

The key to making a property investment interstate work is choosing the right location to start with.

‘You don’t just buy interstate because it’s the thing to do,’ Harvey says.

‘You buy interstate because (there’s opportunity).’

Factors Harvey’s team look for include population growth, jobs, good infrastructure, favourable vacancy rates and a diverse economy. ‘They’re the things that drive the decision to invest in a particular area,’ he says.

If you don’t live close to your investment, it’s more important than ever to choose a good managing agent.

‘Make sure they do regular inspections, make sure the rent is accurate and up to date, because when you’re interstate you may not know the local rental market and it can fluctuate up or down, depending on what is happening in the market,’ says Harvey.

‘If in doubt, just get another appraisal from a different manager in the area, even [if you’ve] got it leased.’

Posted by Carolyn Boyd – Domain Blog on 5th June, 2015