Should first time investors stick to buying within their city/state to start with?

[nhan4769]

After a hectic 18 months of career changing I have recently gained stability in my professional career and am looking to invest in the next 6-9 months as I save up a deposit.

I have noticed the general consensus that regional areas have higher yielding (and lower growth potential) properties. I also understand that some regional towns have very high capital growth opportunities (at high risk ie mining towns). I also understand that each state has their own market within markets, and some are more attractive than others.

As a first time investor, should I limit myself to purchasing within the Sydney area (e.g. bounded roughly by Blacktown in the west, wollongong in the south, etc) or should I also consider the regional NSW or even interstate properties? While I am undertaking a lot of research, the fact is that I have no actual experience in buying/managing a property. My thoughts were that it may be better to 'cut my teeth' closer to home.

It may also be relevent: my average working hours are around 60+ hours a week, so realistically my only research/inspection/renovation times will be weekends.

Greatly appreciate any advice.

 

[Rixter]

No right or wrong way to your question. It really comes down to how you feel about it yourself based around your personal risk profile.

Me personally, I felt most comfortable purchasing within the metro area where I lived for my 1st investment property.

 

[nhg]

There are a lot of things you learn when you first invest (my first investment taught me a lesson or ... 100).

It depends on your risk profile (as stated previously), I purchased sight unseen (and have since done-so again and, thankfully, well), though had made trips to learn the area quite well before hand. Although it didn't go as smoothly as i'd have liked, I was fortunate the capital growth in the area (St Marys) covered my mistakes.

A friend from Newcastle recently purchased in Tawoomba, QLD and made money due to capital growth before settlement, the rent will be sufficient to cover general maintenance and expenses.

This was only possible as both of us had a bit of time up our sleeves to travel and do some renovation work to the properties once settled. My father in Sydney would do a lot of the maintenance work himself so it saved me money.

Looking back I would have been happy if:
- I had a trusted/property sauvvy friend in the area;
- I knew how to choose and deal with PM's and tradespeople;
- The numbers showed the property did/would soon make enough to cover its own expenses.

That would have satisfied my own risk profile, however your sleep-at-night-factor is the most important criteria of all.

Hope that helps.

 

[Coota9]

I am facing the same issue gearing up for my first investment property purchase also and the decision to buy local or interstate.
My driver is that the investment needs to be in an area that will will give me the best return but has stopped me moving forward because of the site unseen factor.
Michael

 

[The Fence]

Yes, there is no right or wrong in how you go about investing other than that if it is wrong then you will pay for it.

But.........that will be a lesson learned so make sure you investigate all the possible scenarios and weight the risk to return and then finally plunge yourself in to it just like everyone who has gone before you !!!

Scary stuff hey...? But really once you get into it and begin to learn and get rid of the fears that are not so bad after all then you should be flhying high...unless you are a total retard...yep, thought so, you're not, & you are totally responsible and can think for yourself so go for it!!!

 

[nhg]

Yes, there is no right or wrong in how you go about investing other than that if it is wrong then you will pay for it.

But.........that will be a lesson learned so make sure you investigate all the possible scenarios and weight the risk to return and then finally plunge yourself in to it just like everyone who has gone before you !!!

LOL, well said. It took me 2 years of reading books and talking to people who have done it before me before I was confident (if you can call it that, more like blinding fear) enough to purchased my first place.

I was freaking out, my close friends and family were already over hearing about property before I had even had one. It was such a relief to just buy the first place.

You WILL make mistakes, you can avoid it as long as possible, but if you want to get ahead, mistakes will be made, and hard lessons will be learnt.

I think that is why a lot of those more clever than I, insist I focus 90% of my time on mind-set and the rest on researching and purchasing property. It really is a case of 2 steps forward 1 step back, but good God it's worth it. Not for the financial gain, for the strength and confidence you gain.

 

[Rbellaj]

Sounds very similar to us. We have our loan ready to go for our first IP but to be honest the auction clearance rates and the hooha made in the papers on the weekend has spooked me. I also was looking Bankstown, Blacktown, Liverpool etc but it is scary how quick they are selling. We also have little time to venture out into the western suburbs to research and inspect. Busy with a bub and back at work. I am considering outside of Sydney now but looks like the consensus is to buy here if you can afford?

 

[monalisa]

We started close to home a couple of years ago - Western Sydney. We have done well with it. We did have an option to purchase else where - there were a few people buying up in Cairns a couple of years ago.

We still stuck to Sydney, and have done well.

I would personally stick closer to home if I was starting out.

 

[dreamgirl]

I purchased my first IP sight unseen and interstate, in a new subdivision in Cairns.

I didn't know it wasn't fully fenced until the neighbour at the back wrote to me and asked if I wanted to go halves with the fence!

Apart from that, I haven't looked back. I don't think it matters where you buy. Just pick up the phone and make that offer!

 

[Brady]

I purchased first property kind of locally but it wasn't my reason for choosing to buy there, just worked out that way. I don't drive past or do any maintenance or self manage so could be on 10000km away for all I care

Two straight after that were sight unseen.

You need to buy somewhere that you are comfortable with, seeing my purchase doesn't make me comfortable. Doing the researching and believe that it's in a good growth area makes me comfortable.

Best of luck, but I would suggest trying to do a lot of research in the next 6-9months whilst you save.

And if you already own a PPOR I wouldn't suggest getting another in the local area as a IP

 

[Benvolio]

im in the same boat as you. I have decided to invest in qld area for now and hopefully once sydney cools down ill try to grab something there. the hardest part is the emotional side of things. i often get this urge to just buy a house here in sydney no matter the price just "get in while i still can". guess its a mindset thing

 

[Deltaberry]

Not necessarily.

If your city/state does not have good prospects (eg Detroit in 2007), why would you stick with it?

 

[S.T]

For those buying interstate and site unseen, are you using a BA?

 

[Brady]

For those buying interstate and site unseen, are you using a BA?

No. Haven't felt the need, after doing the research to find that I want to invest interstate I have already found out what type of property is best suited for that particular area.

Guess also depends on what market you're buying into, how hot that market is and what type of property you're looking for.

 

[wategos]

I've always bought in areas I live or have lived in in the past. First IP few doors from gf house. I think for the first better to be local, especially if you might do some work on it yourself.

 

[nhan4769]

No. Haven't felt the need, after doing the research to find that I want to invest interstate I have already found out what type of property is best suited for that particular area.

Guess also depends on what market you're buying into, how hot that market is and what type of property you're looking for.

Once you earmarked one or more properties, how many times would you go and inspect before purchase? Or would you just organise all of the building and pest inspections and base your decision off those reports?

 

[nhg]

For those buying interstate and site unseen, are you using a BA?

This is my opinion, please consider it after determining your comfort level...

BA's should be used in the same way your would use a real estate agent. You need to know the area by doing your own DD, and know it well.

When you hear an address, you would want to be able to have a pretty good idea of where that is, how close it is to shops and schools, transport and the ball-park price.

Whenever I research a new area, I make it a habit of going there a few weekends in a row, driving the streets and meeting all the REA's, property managers, some tradies, talking to the locals.

Then and only then would I consider using a BA or consider purchasing sight unseen.

I know JASPN has a good habit of flying and seeing the areas, kudos to him.

 

[nhg]

Once you earmarked one or more properties, how many times would you go and inspect before purchase? Or would you just organise all of the building and pest inspections and base your decision off those reports?

Hey, good question, and one I considered a lot before purchasing my first place.

From my own experience I've seen each property between 0 and 1 time.

I walked into one of my properties I purchased 1.5 years ago last month and was shocked to see a brand new kitchen. I had no idea. Sounds pretty dumb right, but 8% ROI and potential for a granny flat, in Sydney, I didn't feel the need to be very smart to take that one.

It really comes down to your risk profile.

 

[MTR]

Not necessarily.

If your city/state does not have good prospects (eg Detroit in 2007), why would you stick with it?

Yes, would agree with this.

nhan
I see you are from Sydney, fortunately, it is a good time to be buying/researching your own back yard.

 

[norwoodman]

There's a lot more choices closer to home when you live in a major city. In a regional centre like Gladstone, often you're better off investing outside of where you live if it doesn't make sense to invest locally. That's what I did.

Horses for courses.