Investing In Property Investing Interstate
When people think of buying an investment property, many only think locally. Investing in a property interstate could possibly be a smarter idea, potentially resulting in a better return on your investment. it may also be a potential way to snaffle a bargain. You could be buying into an area with greater potential capital growth compared to your home state – as each state reaches different stages of the property cycle at different points.
An Investor/Tenant Survey indicated only 14 percent of Australian investors surveyed own an interstate investment property.
Some of the key issues to keep in mind include:
The logistics of property management
Some may find it hard to manage their investment property from another state. It can be costly maintaining a property and finding tenants if you regularly need to travel between states. Employing a property management service may be able to help here.
Property managers undertake several jobs that can be difficult for an interstate investor to do. They can screen your tenants, source the best local tradespeople for repairs and, by inspecting the property on your behalf; can save you the expense of flights for site visits.
While you may be recommended a property manager by your real estate agent, it’s a good idea to shop around, given there’s usually some variation in the nature and quality of the service that managers provide.
Some, for example, might provide an annual market rent review but others might go to the next level and give you feedback on how you can optimise the rental income on your interstate investment. Not all property managers will be as effective at managing the property or screening tenants - while others could be better qualified and so the fee they charge for their services could vary.
Get a pre-approval
Pre-approval is important because it informs you about barriers you can encounter when you seek to arrange finance for an interstate investment.
Certain lenders can be restrictive in the terms and conditions they attach to loan approvals in different parts of the country.
The location of the property could impact the amount you can borrow from a lender – and it’s important to remember different states have different fees and taxes.
Getting a pre-approval can give you the confidence you need to make a sound investment decision.
Visiting the property
Visiting the property and seeing it is more telling than simply viewing pictures. But the travel and cost associated with investing in interstate property obviously imposes limits on the time you can spend seeing the property. Likewise, it's expensive to make the discovery yourself after you shell out for flights and associated travel expenses, so Safe Future Finance can help you to research the property and area as diligently as possible prior to undertaking closer physical checks. When you're confident you’ve identified a suitable interstate investment property, as an MFAA accredited finance broker we will be on hand to support you to get an appropriate loan for your needs.
DID YOU KNOW ABOUT NON-BANK LENDERS?
Deciding where to go for your home loan is one of the most important decisions you’ll make. While many prospective property owners will choose to use a mainstream lender, non-bank lenders also have their advantages.
What are non-bank lenders?
Essentially, a non-bank lender is a lender that’s not a bank, credit union or building society. It has its own source of funds, which it lends out with a margin for profit.
A non-bank lender is a company that borrows money from a bank at wholesale rates and then lends the money with a profit margin added. Most mortgage brokers work with both banks and non-bank lenders.
Potential benefits of a non-bank lender
There are several benefits associated with taking out your home loan through a non-bank lender, including:
Lower overheads generally mean lower fees
Non-bank lenders usually have smaller overheads, because they have fewer offices and fewer expenses when it comes to marketing and labour. This should lead to lower fees and better rates.
Non-bank lenders try to offer a more personalised service because they tend to have a smaller database. It’s likely that you’ll be given more attention right through your home loan process, even after you’ve signed on the dotted line. Also, while you sometimes might deal with multiple people at a bigger bank, with non-bank lenders it’s more likely that you’ll be dealing with one person from the beginning.
Sometimes it can take a while to get a home loan approved by a big bank. With a smaller, non-bank lender, you may be approved more quickly because you’re potentially talking to the loan decision-maker.
Range of choice
Given the range of non-bank lenders out there, you have a decent chance of finding one that suits your particular needs and circumstances
There are pros and cons for both big banks and non-bank lenders, so finding the right lender for you is what’s most important. You’ll be the one making the repayments, so you need to be happy with the rates, service and fees that are offered
Many people think that if its not a big bank then rates and costs are going to be much higher. Not true
Ø Non-Bank lenders operate in the same highly competitive market as the high street banks and their loans are covered by the same strict lending rules.
Ø Non-bank loans have all the same benefits and features as the high street banks
Ø Non-bank lenders can have better loan servicing criteria than high street banks
Ø Non-bank lenders have very competitive rates
Ø Owner occupied rates from 3.64% P&I and Interest only from 3.99%
Ø Investment rates from 3.95% P&I and Interest only from 4.18%
Ø Loans feature 100% offset, house purchases, refinances, debt consolidation and construction
(rates are based on an LVR of 80% and a loan amount of $600,000. Rates current as at 19/10/2018)