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Your Property Portfolio: Where to invest… local or interstate?

By Natasha Johns

NEW RESEARCH HAS REVEALED that most property investors buy properties within the suburb that they live in. This data was analysed from 1,150,000 mortgage applications and showed that two-thirds of investors are buying local properties.

However, if you take a moment to think about smart investing, minimising risk and increasing the potential of short and long-term capital growth, it can often be achieved outside of your local area or even interstate.

Purchasing properties in different states around Australia is an important consideration if you want to reduce or eliminate your land tax payable and take advantage of varying growth cycles when it comes time to sell.

Economic experts who researched this data analysed that most property investors simply favoured the familiarity of their local area, as well as the convenience of being able to self-manage (with 20% of investors self-managing) even though financial returns can be greatly increased by appointing the right property manager/managing agent.

This researched fact of buying local properties, also suggests that investors are involving a level of emotion in their investment choices, which isn’t a characteristic trait of successful investors.

You need to buy investment properties with a business mind not an emotional one, taking into consideration research, area demographics, infrastructure, vacancy rates, average rents, general statistics, trends, returns on investment, re-sale values, property price growth and black and white bottom-line numbers.

For most people, investing in property is one of the biggest financial decisions they will make and often includes a significant debt and financial risk element.

For this reason, it is important for property investors to understand what makes a good investment opportunity, how to compare investments and how to plan their strategy to ensure they achieve their objectives.

It should not matter where the property is located… just if the numbers stack up.

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