When you talk about purchasing in different areas so as not to get caught with all your eggs in one basket, do you buy sight-unseen via a buyer’s agent, by researching on the internet and liaising on the phone, or by flying interstate and viewing the properties yourself?
I’m looking at purchasing another investment property and my initial thought was to stay local where I knew the area; however, I think it would be better for me to look to Sydney or Brisbane. How can I purchase in another state when I live in Western Australia?
I invest in many different areas of Australia to spread my risk and not ‘get caught with all your eggs in one basket’, as you mentioned. This also helps when I’m using equity for another purchase, as capital growth can be staggered. I purchase sight-unseen because the property, to me, is all about the numbers. There’s a great deal of information on areas when you have internet access and time to invest in your research.
I haven’t felt the need for a buyer’s agent because I’ve always preferred to investigate my own properties and get an education in the process. To save travelling time, I’ve also done all of my research on the internet regarding the properties, location to schools, population growth, capital growth, vacancy rates and floor plans. If the property indicates strong capital growth and returns, then I negotiate with the agent.
Once the property price and conditions have been agreed on, maybe you could take the time to visit the property. You could do this by adding a condition of purchase “subject to the purchaser’s inspection” or simply during the cooling-off period, trusting that the state of purchase has this as part of the standard purchasing contract.
It’s wise to know the area you’re investing in, but this can be anywhere in Australia – you just need to take the time to educate yourself in other locations apart from your own local area. I’ve always felt that the chances are pretty slim that I’m living in the best location of Australia to invest in. If you feel that this is the only way to enter the market, perhaps your own local area is at least a good start and this alone may give you confidence to purchase in another area in your investing future.
Answer supplied by Prue Muirhead, Your Investment Property’s Investor of the Year 2009
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