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Why ‘borderless investing’ could unlock property wealth

It’s only natural that a portfolio of real estate investments will be made up of properties close to your home.

Whether you’re investing in the state you live in or the city and town you dwell in, the allure of purchasing properties in an area you know well and can visit easily is strong.

However, if you live in a real estate market with prices at ‘unaffordable levels’, for most the ability to save while covering low cashflow deals and also the time it may take to put together a deposit for the next purchase could reduce the ability to scale out your portfolio.

Increasingly, Australian property investors are looking further afield to find a cashflow positive property to put their hard-earned money into, a process known as ‘borderless investing.’

The ‘magic figure’ of $500k investment

The property valuation group Herron Todd White recently released its monthly report on the market focusing on July, and found borderless investing is rising as investors look for growth away from major centres.

SOURCE – https://www.htw.com.au/month-in-review/

The report said “if you are looking for more bang for your $500,000 buck then you will have to travel further afield” than major centres like Sydney or Melbourne.

“If you’re willing to compromise on property type and location, you can still buy and reside within a long commute of both CBDs at (or around) this price.”

The report identified far-flung locales like Karratha in WA, Launceston in Tasmania and the Adelaide in South Australia as rising markets for houses, while recovering markets were identified in Cairns, Gladstone and Mackay in Queensland.

Different locations, same investment strategies

Despite the sunny outlook in those previous mentioned areas, investing away from major centres still has its challenges.

The report also noted that the property market in areas like Alice Springs, Perth and Darwin had bottomed out (or may still have some room to go). It also highlighted a declining market in Kalgoorlie, the Southern Tablelands and Newcastle.

What may also be ‘favourable’ in your hometown, may not be ‘in demand’ in the other locations, so it is important to not be trapped with your biases.

Regardless of whether you decide to invest in property close to your home or further away, the principles remain the same. A good property in a good location with growth potential is what you’re after.

The key takeaway from borderless investing is that it could pay to open up your investment strategy to properties in other markets. This way you could diversify your holdings and take advantage of better conditions than those closer to home (if available). You can also ‘stretch’ what your $ could do for you as buying expensive does not always represent equal or greater ‘value’ when purchasing an investment.