Diversification means that when some properties are slowing down in some states you should have properties in other states that are growing.
Four reasons you should consider investing in property interstate: Ed Chan
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Should you consider buying an investment property interstate?
I often get asked this question.
Some people say you should only buy within the area you live in because you are familiar with the prices, can drive past to inspect the property and if required make your own repairs.
While all those reasons have merit, the answer goes far beyond this.
There are several really important reasons why you should invest in properties interstate, and it’s more about good investment principles than convenience.
Here are a few:
1. Ride the property wave
The property cycle moves differently in different states. When one state is at the top of the property cycle other states could be at the bottom. You should buy at the bottom of the wave and ride the property wave.
2. The property clock
The property market moves through a cycle and when things are booming in Victoria they may not be booming in NSW. When they are slow in Perth they might be booming in South Australia.
Currently Melbourne is oversupplied, Sydney is “steady as she goes”, Queensland is at the bottom of the cycle but the Gold Coast is anticipated to stay at the bottom for many years to come, while Brisbane is showing signs of life. Perth is steady as she goes, and so on.
As you can see, each state is at a different part of the cycle, so it’s important you time the purchase at the bottom of the cycle.
Buying in your own suburb or state might not be the proper thing to do if you are at the top of the cycle.