With demand outstripping supply in lots of areas it’s no surprise that many purchasers are tempted to buy sight unseen. Purchasing a property this way without viewing it in person – can be risky.
How many times have you viewed real estate pictures and then realising that the use of angles, wide lens and lighting can make a place look different to the reality. There’s other factors too, what if…
- it has a strange smell when you finally do enter the property?
- it’s a little darker than how it appeared in the advertisement photos?
- the neighbour has a junkyard encroaching on your doorstep or there’s a huge electrical tower outside?
These are all valid concerns, but despite this, some property hunters are still diving in with a sight unseen regional or interstate purchase. Why?
The most common reason is that there are low levels of new listings which is creating fierce competition between buyers in some markets, and savvy investors know that when an opportunity arises, sometimes you just need to jump.
So, how do you mitigate risk when buying sight unseen? Here are some tips.
Do your research
If you are buying for Investment, what is your driver? Investors usually purchase for either capital growth potential (higher market potential or future development opportunity) or for cash flow. This will ultimately affect the type of property you buy.
If capital growth is the end goal, consider:
- Population changes – Is the area expected to grow? Are more jobs likely to become available and attract more people to the area?
- Supply and demand – Is there strong demand for housing in the area? A lack of supply and strong demand could be a recipe for price growth.
- Lifestyle appeal – Is it a place where people want to live? Is it a ‘leafy’ suburb, for example, or near the beach? Is the area being gentrified with new properties and amenities?
- Statistical indicators – Consider the historical capital growth. What are the vacancy rates like? Are vendors discounting?
- Infrastructure and amenities – Are there any planned infrastructure improvements or zoning changes that could affect capital growth? Is there good access to amenities like transport links and schools?
If you are buying purely for cash flow, you’ll want to find a property with a high yield. With this strategy, the rental income will likely cover the costs associated with owning the property.
Get an inspection
If there’s one thing that the pandemic taught us, it’s that you can do more than you think remotely.
With so many online resources available, it’s possible to find your next real estate investment, do extensive research online, get a feel for the neighbourhood on Google maps, and even do an inspection – all from your computer, iPad or smartphone.
These days most real estate agents will happily do a virtual walkthrough with you via a video call. However, if you can get someone to physically inspect the property on your behalf, that’s always preferable.
It could be a family member or friend whose judgement you trust. Otherwise, you may consider hiring a buyer’s agent. They can do inspections, offer advice and bid on your behalf at auction.
As with any property purchase, don’t forget to get building and pest inspections.
Get a valuation
An official valuation is a great way to get a true indication of a property’s value and to make sure you’re not overpaying. If you’re purchasing sight unseen, it’s definitely worth considering paying for a valuation for peace of mind.
Speak to a property manager
If you are buying an investment property and will be utilising a property manager to take care of it for you. It may be worth enlisting their help sooner rather than later?
If you’re buying sight unseen, they can provide market insights and help answer any questions you may have.
Ready to get started?
Keeping an open mind to opportunities that aren’t necessarily in your own backyard can pay off, as long as you do your research and due diligence.
If you’re considering buying an interstate or regional property sight unseen, it’s important to have your finance in order.
Speak to us about organising pre-approval, so that you’re ready to go when the right property comes along. Get in touch today.