Remote property investing is on the rise, here’s why
With property prices in major cities at an all-time high, first-time home buyers and savvy investors are looking to regional areas and interstate to build their portfolio.
A glance at the property news in the weekend paper is enough to have anyone’s head in a spin, with property prices booming across major cities and along Australia’s East Coast. In Sydney alone, economists are predicting a 19 per cent rise in 2021.
With property prices in cities at an all-time high, savvy investors are looking beyond the limitations of their local markets to regional areas and interstate for opportunities where property is still affordable, and that will see them gain higher returns. A trend that many first home buyers who have been squeezed out of the city markets have had to adopt.
The movement towards buying in regional areas within close proximity to major cities has been happening for quite some time, but it has picked up momentum since the pandemic. Now, there are no signs of it slowing down.
What is remote property investing?
Remote property investing is when you own an investment property in another city, state or regional centre to where you live. Since Covid-19 hit, investors are changing the way they view property. People are more willing to venture away from familiar areas, seeking out areas that they may have otherwise not considered.
According to Domain, investors are purchasing properties an average distance of nearly 300 kilometres away. But they’re not all travelling the distance to attend open homes.
Advancement of tech
Thanks to the advancement of technology, buyers have more tools readily available to them to view property in a way they haven’t had before; virtual tours, drone images, augmented reality, 3D images and floor plans. Since the pandemic hit, buyers and investors are willing to purchase ‘site unseen’ from the comfort of their home with these tools.
With extensive data and neighbourhood reports, property settlement, contracts, and Verification of Identity being online, purchasing a property can also be done without ever visiting the locale.
Buyers agents and professionals at their fingertip
Purchasing property ‘site unseen’ doesn’t come without its risks. That’s why savvy investors engage a buyers agent and local professionals, such as valuers, property managers, conveyancers, local contractors and so on, to ensure they're not overpaying and are making an informed decision. Engaging professionals to assist with purchasing property also takes the emotion out of the process, making it easier to walk away and not overpay.
With the help of these professionals, and the advancement of technologies, buyers have never been more educated about the best locations to invest.
The pros and cons of remote property investing
One of the biggest advantages that attract people to remote property investment is that you’re not bounded by geographic limitations, meaning you can diversify your portfolio, tap into rising markets and potentially earn higher rental yields. But, like all investments, remote property investment doesn’t come without its risks.
Buying into a market that you’re not familiar with can open you up to the possibility of overpaying. That is why economists warn against comparing regional and metropolitan property prices. Another pitfall that investors find themselves in (but can easily be avoided with proper research) is not understanding the needs of local tenants, which can affect their ability to secure good, long-term tenants.
Priced out of major cities, remote property investing is a great way for first-home buyers and first-time investors to get into the market and seasoned investors to expand and diversify their portfolio. And as more and more people look to leave the major cities for regional centres, the demand for rental properties, especially in hubs within easy reach of major centres, is high.
To learn more about remote property investing, speak with your local Hockingstuart agent.