The pros & cons of buying property interstate

The pros:

There are a number of clear benefits of becoming a border less investor.

  1. Investing in a city other than your own can be a smart way to diversify and spread your risk across multiple markets.
  2. It also allows you to take advantage of growth cycles that may be stronger than your local area.
  3. And investing interstate may lower your land tax bill as each state has its own land tax threshold.

Over the years, I’ve come across a large number of investors who strictly buy in their own state (or worse still, their own city or back yard) because it’s in their comfort zone.

It just makes sense to them and they can easily visit the property and see it with their own two eyes.

They make this huge investment decision based on their proximity to the property, rather than on evidence, facts, or research.

They get it wrong because they think searching for properties (in their backyard) is researching – they are very different things, so they tend to buy under performing properties.

What investors really need to do is look for the right property, in the right location, at the right price, and interstate investing hugely opens up those opportunities – it just makes sense to take advantage of good investment opportunities that you’re able to identify locally.

The cons:

Of course, investing interstate doesn’t come without risk.

You see, Australia is made up of many different real estate markets, each with its own cycle and which don’t always move in sync, so you have to have a good idea of what’s happening in the market you’re considering.

You just have to look at the significant variance of growth in the different property markets in 2021 to see what I mean.

In the last quarter alone,Domain House Price Report for the March 2021 quarter reveals that house prices in some cities have surged by 8-9% so far this year, while others have enjoyed a much more lackluster sub-2% growth.

And it’s the same story for units – prices in some cities have jumped as much as 3.9% while in other areas prices have actually declined.

And the divergence between markets doesn’t stop there either – even within each city, some suburbs or even streets will even see a disparity between market values.

By that I mean, one suburb can be experiencing growth, while a nearby suburb may not.


There are so many reasons for this, including the individual characteristics of the neighborhood.

An oversupply of apartments, for instance, can make one suburb perform poorly, while a few suburbs over, closer to the city and with fewer apartments, the market is growing.

Interstate suburbs also carry extra risk in that they need more research because you can’t assume that what determines property prices in your area will apply to other areas elsewhere.

You’ll need to do your due diligence and additional research if you’re going to invest interstate in areas you don’t know as well as your own backyard.

RealRenta has all the tools that a property manager has, but at over ¼ the cost of a property manager.

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Jason Gwerder
Thursday, 14 October 2021

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