When it comes to buying an investment property, it can be tempting to limit your search to the local area. But there are good reasons to look further afield – and with the right professional support, it’s easy to manage a rental property from out of state too.
Borderless investing spreads risk
In a country as large and diverse as Australia, it can make good financial sense to invest in locations beyond your local neighbourhood.
The property market is far from uniform across our capital city markets, and we see this in varying rates of capital growth, rental yields and vacancy rates – all of which can be driven by a variety of factors impacting different markets at different times.
By spreading your property portfolio across different states – in other words, following a strategy of ‘borderless investing,’ investors can reduce the impact of a downturn in one particular market, with the potential to capitalise on the gains being recorded in another.
Over time, this diversified approach can deliver greater long-term returns while also lowering investment risk.
Managing a rental property from out of state
While there are clear merits in a diversified investment approach, a key stumbling block for investors comes with the issue of how to manage a rental property from out of state.
The solution lies in partnering with a trusted local property manager.
Damian Collins, REIWA President and Managing Director of Momentum Wealth, explains, “Managing a property remotely is much less complex for investors who use a property manager. You can have your entire property taken care of, while benefiting from the expertise of a local area expert who understands the dynamic and legislative requirements of the local market.”
So, what do you need to know when it comes to property management in WA in particular?
Property management in WA is all-inclusive
Interstate investors who buy property in Perth will find that property management in WA is far more comprehensive compared to the Eastern states.
As a guide, property managers in WA can pay the property’s outgoings, such as council and water rates, as well as representing owners in third-party dealings such as strata matters and insurance claims.
The property manager will also ensure the property is kept in great shape by screening tenants, handling repairs and maintenance, and (in the case of more proactive property managers) organising ongoing servicing items such as annual gutter cleaning and electrical compliance checks.
Most significantly, rental properties in WA are inspected every three months, compared to twice per year on the east coast at most. This proactive approach helps maintain the property’s condition, which supports healthy capital growth.
This higher level of service and involvement makes it effortless for investors to own and manage a rental property from out of state.
The intense degree of care and day-to-day involvement does mean property management fees in WA tend to be higher than in eastern states. But as Damian notes, “It’s a small price to pay for peace of mind that a valuable asset is being well looked after.”
5 Tips to manage property from another state
- Get to know the tenancy laws that apply in the state, so you can meet your legal obligations as a landlord
- Research market rents to know what you should charge, and establish a clear process that makes it easy for the tenant to pay rent – and pay on time.
- Consider where you will advertise the property to attract a wide number of applicants. Allow time for a thorough screening process of tenants, including contacting referees.
- Set a clear schedule of dates for ongoing property inspections. Be sure you adhere to state-based laws around tenant privacy and provision of correct notice periods.
- Consider engaging a professional property manager. It makes the process of managing a rental property from out of state a lot easier. However, it’s important to do your due diligence to help ensure you engage a reputable company.
Choosing the right property manager
While a good property manager will ensure your property is well maintained and the tenancy is effectively managed, a great property manager will go one step further; they will proactively help you to lower your risks and maximise your return on investment.
This involves four key steps:
- Maximising market performance: The best property managers will take a proactive approach to ensure your rent aligns with the current market and advise on rent adjustments where necessary. This means increased returns in a hotter market and a reduced risk of long vacancy periods in a cooler market.
- Value-add recommendations: A proactive property management company will provide recommendations on how to increase rental value. These recommendations can include minor facelifts (such as painting or replacing door handles), renovations (such as kitchen or bathroom upgrades), or additions (such as investing in appliances like air conditioning).
- Market insights: Sharing market intel keeps owners updated on the factors that could impact their investment property, including market fluctuations, investment opportunities and lending changes.
- A Holistic approach: By adopting a holistic approach, a property manager will be able to identify means of maximising your investment cashflow and improving your rental returns from all angles. Beyond rent adjustments, this might include collaborating with your mortgage broker to flag when you could benefit from a loan review.
Looking to invest in Perth property? Momentum Wealth are local experts dedicated to helping investors grow and manage their Perth property portfolio through our full suite of in-house property investment and management services. Visit our website to find out more about our Perth property investment services.