Buying IP's in other cities ...

[WebBoard]

From: Will G


I have read a number of books on IP's and one of the themes that seems to come through is 'buy IP in cities you know'.

I currently live in the ACT and are comfortable buying IP's in the ACT however I feel I am missing out on markets such as Sydney & Melbourne.

Q1:
Under what conditions would you buy an IP in an area you are not familiar/comfortable with ?

Q2:
What level of research should be undertaken before deciding on an area to buy in then buying the IP ?

 

[NigelW]

Reply: 1
From: Nigel W


On 5/7/02 11:04:00 AM, Will G wrote:
>Q1:
>Under what conditions would
>you buy an IP in an area you
>are not familiar/comfortable
>with ?

I think you've answered your own question. The reason why most books etc caution against buying in other cities is because you are GENERALLY not familiar with them. However if you know a city but just don't happen to live there then what's the problem? (putting to one side some logistical issues that may be solved by a property manager in that city). By way of example I now live in Sydney but invest in Brisbane because that's the market I KNOW from having lived there for some time.

>Q2:
>What level of research should
>be undertaken before deciding
>on an area to buy in then
>buying the IP ?

That depends on your risk tolerance. Some people, me included are happy to, and have, made offers on or indeed bought a property sight unseen. It depends on what risk you're willing to take.

If you are the kind of person who needs to see the property then you have two options:

1) fly there and check out the property AND THE SUBURB for a few days (the cost of flights is relatively insignficant compared to your purchase price)

OR

2) get someone like Rob Forward's Property inspection service www.creativefinance.com.au to check it out for you

(no I don't get any kickbacks...but if Rob would like to buy me a beer

Good luck with it, but remember that this is probably a fairly big investment compared to others you've made so you need to be careful before shelling out your hard earned cash. Conversely, don't let excessive caution paralyse you into inaction.

Cheers
N.

 

[gailh]

Reply: 1.1
From: Gail H


Hi,
I have bought properties sight unseen interstate. I read up on these areas in various publications, including Aust Property Investment Magazine. Don't ask me whether it worked out - I haven't seen them yet!

Melbourne and Sydney have just gone through a huge boom. Better not to buy on the crest of a wave in my view (I am in Melbourne, and won't buy here until the market slows right down.)

Gail

 

[Tibor]

Reply: 1.1.1
From: Tibor Bode


Hi,

I am Sydney based and bought 8.5 properties in Brisbane over the past 12 months, several of them unseen. I am falling in love with the deal, not with the property. In a well researched area you can buy safely if the numbers ad up. I am making 10%+ on almost each property in yield, some of them increased by 10%+ over the past 6 months by value (OK I've done remote reno)on the RENOVATED value, with more to come, so I am happy and not scared at all. To me being an out of stater works beautifully. The locals still have not quite woken up (for my and other out of state investors) to this fact, albeit they also start to realise that something just not quite the same as it was 12 months ago.

Tibor

 

[NigelW]

Reply: 1.1.1.1
From: Nigel W


On 5/8/02 8:02:00 AM, Tibor Bode wrote:
>Hi,
>
>I am Sydney based and bought
>8.5 properties in Brisbane

Tibor, I'm intrigued...where's the 0.5 property?!

I hope you got at least a 50% discount ;^)

 

[WebBoard]

Reply: 1.1.1.1.1
From: Will G


Thanks for the advice. It seems to be quite common to buy interstate IP's.

I guess buying Interstate IPS's will also allow me to 'put my eggs in other baskets'. Risk minimisation is always an important part of the equation.

I was recently in Adelaide and identified some areas 'worth a look' and well within my budget.

A 10%+ yield on IP's in Brizzy. Is that Net or Gross yield ?. Sounds like good cashflow positive IP's to me. Canberra is returning on average 5 - 5.5% yield.