How COVID has killed off ‘local investing’

If there’s been a silver lining among 2020’s challenges, it’s that humans have discovered a talent for adaption.

It’s been all too easy to become entrenched in habits when we’re feeling safe in our environments. We choose to do things the way we’ve always done them, because we’re used to the process and can proceed with a relatively ‘ risk-free’ outlook.

We also like to cling to the familiar in times of catastrophe too, but this crisis has been different.

To remain relevant, keep our heads above water and move forward, we’ve all needed to leave our comfort zones across work, family or social interactions.

The same has applied to our property dealings.

For decades, there’s been a tendency to stick with what we know in the property investment realm, but COVID has made in plain that this sort of thinking just won’t hold up any longer.

So, we’ve had to adapt and survive.

From open home and auction event cancellations to Zoom meetings and virtual inspections, buyers and sellers have found ways to keep dealing property.

And somewhat ironically, while you couldn’t cross the border physically, being a borderless investor has never been easier.

Everything has changed

What a huge number of Aussie investors have discovered as a result of COVID is they can invest safely well away from where they live.

And given the concentration of population in and around Sydney and Melbourne, that means a swath of potential landlords looking away from those two hotbeds of high density.

I think it’s become a real shift in our collective psyche’s. We’ve discovered its possible to work remotely and stay productive, relate remotely and keep our social connections alive. Best of all, there’s a realisation we can invest remotely and not only stay the course but, in fact, speed up the ship.

Recently I saw the results of a study by MCG Quantity Surveyors which showed that even before COVID more people were investing away from where they live.

According to their numbers, Australian-based investors had an average distance of 300 kilometres between investment properties and their home addresses – and 30 per cent of those studied were investing more than 200 kilometres from home.

That’s a substantial proportion and COVID has cemented this trend.

Easy remote due diligence

The veracity and accessibility of remote research, as well as the connectivity to well-informed independent advisors in your area of interest is at an all-time high.

It’s just not that difficult to access nation-wide data on markets… and quite a bit of it is free. From median prices to listing numbers, suburb level analysis is just a few clicks away.

And when it comes to actively seeking an investment, local experts are on hand nowadays and don’t require an in-person meeting to get the job done. You can secure area-specific legal advice, town planning assistance and buying and building expertise no matter where you live across the country.

Property investment really has become a national industry. No location is off-limits.

Unemotional decisions

Another element in this mix is that buying out of area actually demonstrates the investing smarts to follow your head, not your heart.

Being unemotional when investing is essential – it must be based on hard data around sustainable rent return and capital growth projections. There’s no guarantee the buyer of your home will pay an ‘emotional premium’ when you eventually sell.

And this year has delivered excellent dividends for those willing to look beyond their home patch.

As an example, if you were a Melbourne local who chose to invest in Brisbane at the start of 2020, you’d be sitting on capital growth of about 1.4 per cent according to CoreLogic. Better yet if you’d drilled down into number at a suburb level, you would have achieved even more with, say, Bridgeman Downs has seen a three per cent increase in its median house price on during the year.

If, however, you’d stayed local and bought in Melbourne ‘because that’s where you live’ CoreLogic indicates you’d have seen a 2.5 per cent fall in your asset’s value over the year to date.

Yes – this is a small snapshot, but it shows that buying an investment where you live isn’t always the smart choice. As we all become more comfortable with distance investing, expect to see activity ramp up.

2020 will be the start of a new wave of cross-border buying, and by making sure you rely on advisors who use unemotional analysis and their local networks, the ability to take advantage of the best possible investment, regardless of its location, is well within your reach.

ASPIRE Accredited Advisors have the advantage of access to properties Australia wide to ensure the property you select matches your strategy.

Richard Crabb | MD ASPIRE Network | PIPA Board Member
Author: Richard Crabb | MD ASPIRE Network | PIPA Board Member

QPIA® - Qualified Property Investment Advisor | Licensed Real Estate Agent - VIC: 082760L - SA: RLA 292544 - QLD: 3579879 |Diploma of Financial Planning |Active Property Investor | Board member of PIPA - Property Investment Professionals of Australia. Richard is the Founder and Managing Director of the ASPIRE Advisor Network. After an extensive career in corporate finance and through his personal investing experience, Richard identified the need to create a system and framework that supports ethical, independent property investment advisors who operate in the new property market. The ASPIRE Advisor Network now supports independent property advisors across Australia by providing their business engine and acquisition process, designed around concepts of future compliance in the brand new property sector. Richard together with the ASPIRE team has also developed a complete end to end software platform, which is leading the way to deliver property investment advice in the new property space. Our goal is to work with investors to implement their goals and objectives buying investment properties across Australia, utilising a structure and information-rich end to end experience.

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