“The biggest challenges investors will incur is understanding the people, places and habits of the regional sector,” says Sam Saggers, founder of Positive Real Estate, who adds that your dealings with property managers in regional areas usually need to be relationship-based.
“The choices investors have in city markets are usually vast. There are plenty of agents to choose from. In regional markets, a township may have only a few choices of agents, [who] may vary in level of service. The worst thing you can do in a regional environment is alienate the agency you are working with. Remember, these are small towns and cliquey environments.”
Towns without property managers
Saggers also warns that some regional markets have no agents in the town and have to be serviced by agents in larger centers far away. If this is the case, the cost of servicing the property increases.
So too does the risk if it is a one-agent town. Saggers recalls how Wee Waa, a cotton town in regional NSW, had only one agent in town who serviced the area for forty years. When he retired there was no one to fill his place and now the town is serviced by expensive agents who are not from Wee Waa.
Saggers says that it is common for property managers to have quite different views to owners. “Agents with old ideals often are reluctant to push rents up – particularly if your tenants are older members of the community and larger regional townships do tend to have large retirement communities.”
Saggers also points out that costs tend to be higher in regional areas. “[With] limited competition and a high need for real estate agents and tradespeople, you can often pay a premium in rental fees, sometimes as high as 11%+GST and more for repairs and maintenance than you would in a city.”
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