Why you should never buy an investment property unseen2

Why you should never buy an investment property unseen

Buying a property unseen is a risky investment decision. Learn how you can minimise the risk of buying a lemon.

The online world has made it easy for investors to purchase a property sight unseen thanks to the abundance of tools and resources such as Google Maps and street view, virtual tours, suburb profile reports and online real estate listings. But is it smart?

It may be tempting to purchase the property unseen as this will save you the hassle (and money) of travelling to inspect the property yourself.

While everything may look good on paper (or on-screen), not seeing the property for yourself could mean that you could end up with a property that is markedly different from what you expected.

You could wind up with a property that has structural defects or is in a suburb with undesirable services nearby – such as a brothel up the street – which was not displayed in the online ad or photos.

From market research to getting an independent valuation and organising your contracts correctly, you can take steps to lower your risk when investing from afar.


Why you shouldn’t buy a property sight unseen

If you buy a property unseen, you may encounter the following issues:

  • Misleading photos. Although real estate agents are not allowed to misrepresent the property, their objective is to achieve the highest possible sale price, so they may represent the property in a more positive light. A wide angle or zoom lens can make a property appear much larger than it actually is.
  • Structural faults. The property may have structural issues or faults, such as cracks in the paint or floorboards, which were not portrayed in the ad. If the property has bad ‘bones’ or does not comply with the building code, then this may mean costly repairs and maintenance in the future. These types of issues would normally be identified during the pre-purchase inspections.
  • Ambience. It’s hard to get a feel for the ambience of a property and the surrounding area when you’re not physically there. Factors such as traffic noise, a sense of community or the amount of natural sunlight can only be experienced by visiting the property for yourself.
  • Failed strategy. While you may have briefly researched the growth drivers of an area, buying a property sight unseen can lead to a failed investment strategy. If you make a rushed decision and fail to inspect the property yourself, you could risk buying in an area with limited capital gain or an oversupply of stock.
Back to top

How can I minimise my risk if I am buying a property sight unseen?

While it is a risky strategy, there are some ways that you can lower your risk if you want to make a purchase sight unseen.

  • Market research. If you undertake exhaustive research into the growth drivers of an area, including supply and demand factors, then this knowledge can help you make an educated decision. You’ll need to identify your buying criteria, such as the amount of rent you expect to receive, your purchase budget, the range of growth you’re seeking, and the type and size of property you’d like to buy. You should go on the council website to see what infrastructure or development projects may shift the market dynamics of the area. You have several online resources at your disposal that can help you understand the market. Suburb profile reports from CoreLogic RP Data, Google Maps, virtual tours and real estate websites provide useful information on an area.
  • Independent valuation. Get independent valuations to get an idea of the property value, as this will help you set your rental amount.
  • Organise contracts. Most contracts of sale include a cooling-off period, which is normally five business days, depending on the state in which the property is located. The cooling-off period becomes a safeguard when you buy a property sight unseen, as it gives you time to inspect the property and identify any issues that need to be resolved before settlement. You can also negotiate a clause in the contract to protect you, such as ‘subject to the purchaser’s inspection’.
  • Consider new properties. If you’re going to buy a property uninspected, opt for new or off-the-plan properties, as they are less likely to have structural damage. In addition, you’ll be covered by builder’s warranty insurance if anything goes wrong.
  • Evaluate risk. Your suitability to buy a property sight unseen depends on your risk profile, so you should consider whether you’re comfortable investing from afar and taking on the risks involved.
  • Enlist professional help. As your portfolio expands, it may become difficult to inspect the properties you buy, which is why using a buyer’s agent could be useful. You may want to speak with a building inspector and a rental manager, as they can review the layout and positioning of the property as well as its appeal based on its inclusions, location and size.
  • Send someone on your behalf. If possible, send someone you trust to inspect the property on your behalf, such as a family member, friend or coworker, for an honest and unbiased opinion of the property.
Back to top

Why do some investors buy a property sight unseen?

While it’s not advised that you buy a property sight unseen, there are some advantages to pursuing this strategy.

  • Eliminates emotion. Buying a property sight unseen can remove the emotion involved in the purchase process, allowing you to concentrate on whether or not the numbers add up. This means you can make a decision based on the figures rather than the aesthetics or ‘feel’ of the property.
  • Saves time. If you’re buying interstate, then buying a property sight unseen saves you time and money that you would otherwise spend travelling to inspect the property yourself.

Start comparing loans for property investment today

Rates last updated August 16th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.89%
4.24%
$0
$0 p.a.
80%
Sharp interest only package rate
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.99%
3.99%
$0
$0 p.a.
80%
Special discounted interest rate
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.98%
3.98%
$0
$0 p.a.
70%
Requires a 30% deposit
Investors can get a 100% offset account and a low rate if they have a big deposit. 100% online application process.
3.91%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
3.97%
3.99%
$0
$0 p.a.
80%
Competitive investment package loan
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
4.09%
4.87%
$0
$395 p.a.
90%
10% deposit option available
Buy your investment property and set your repayments for the first year. Available in QLD, NSW and ACT only.
3.99%
5.17%
$600
$0 p.a.
90%
Available with a 10% deposit
Competitive rates for fixed for 3 years with redraw facility.
3.93%
3.94%
$0
$0 p.a.
80%
Competitive investor rate with plenty of features
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account.
3.99%
4.14%
$0
$0 p.a.
70%
Competitive investor mortgage for borrowers with a 30% deposit.
4.29%
4.31%
$0
$0 p.a.
80%
Flexible, low fee mortgage
Investors will pay no application or ongoing fees for this interest-only loan.
4.08%
4.09%
$0
$0 p.a.
90%
Low-fee investor mortgage with a partial offset account. 10% deposit option available.
4.18%
4.18%
$0
$0 p.a.
80%
Competitive investment mortgage
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.99%
3.99%
$0
$0 p.a.
70%
Save on fees with this investor mortgage
Investors with a 30% deposit can get this low rate loan to fund their property portfolio.
4.29%
4.31%
$0
$0 p.a.
80%
Simple, flexible investment product
A simple, variable rate investor loan from an online lender that keeps fees to a minimum.
3.99%
4.62%
$395
$0 p.a.
80%
Flexible fixed investment loan
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.24%
4.68%
$0
$0 p.a.
90%
Investor loan with a small deposit option
Fix your investment repayments for 1 year. You can get this loan with a 10% deposit. Available in QLD, NSW and ACT only.
4.13%
4.14%
$0
$0 p.a.
90%
Available with a 10% deposit
Access a fee-free offset account and a special interest rate for investors.
4.14%
3.96%
$0
$0 p.a.
80%
Low fee investor mortgage
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.18%
4.19%
$0
$0 p.a.
80%
Line of credit for investors
Investors can easily access their equity using BPAY, a debit Master Card or cheque book with this interest-only line of credit.
4.31%
3.95%
$0
$0 p.a.
80%
Rapid online application process
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.14%
4.17%
$0
$0 p.a.
80%
Competitive rate for investors
Investors can enjoy flexible repayment options and pay no application or ongoing fees.
3.94%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.
4.29%
4.27%
$0
$198 p.a.
70%
Lock in your investment rate for 3 years
Fund your property portfolio with this fixed rate mortgage which includes a 100% offset account. 30% deposit required.
3.84%
3.91%
$0
$0 p.a.
80%
Flexible low fee mortgage
Enjoy a fast application process and flexible repayment options with this fixed rate mortgage for investing.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details below to receive an obligation-free quote from an Aussie home loans expert today

finder.com.au respects your privacy

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the finder.com.au privacy policy and the Aussie privacy policy.

Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.

  • FREE Suburb and Property Report with every appointment.
  • Access 3,000+ loans from over 20 lenders.
  • Get expert help with your loan application, including paperwork and eligibility.
  • Over 1000 brokers who are able to help you in your local area.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)

Back to top

Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.
Ask a question
Go to site