Hi investing gurus.
I am new to this. I have mortgage on the house I am living in. I am also now considering buying an investment property few questions:
1. Is it better to invest in a house or an apartment- lets say the location is similar?
2. Is it better to pay off my mortgage on my existing house fully before investing or should I go ahead and get another property.What things I should be considering in making the above decisions?
Thanks a lot for the help.
Rajesh
Rajesh,
I think it depends on where you are looking. Land is valuable when it is in scarce supply… but if you are looking say, in a rural area, then an apartment/unit could be more feasible. Generally, body corporate fees can be a killer in a lot of newer apartments, but in some places, units can be far more attractive. Units only really came into being some time in the 60’s, so you can get an idea of their age just by looking at them, often. If the BC rates are too low, it might be that the block is neglected. Too high, and you are paying for pools, lifts, common areas, gyms, cafes etc that may be attractive to tenants, but are they necessary for your IP?
Paying BC fees can be ok though, if there are problems with the IP- because all tenants have to pay, whereas with a house- you have to pay by yourself.
Make sure, if you are buying an IP, that there are no special levies coming up- these should be proposed in the last BC AGM meetings.
Land does not always appreciate- depends on where it is. But houses are considered to be a “fundamental” of investment, in my opinion, because land often *does* appreciate- in good locations.
So many things to think about re buying an Ip- perhaps ask some more general questions, and people can provide you with some more specific ideas.
kay henry
In my opinion I’d buy the house, but it really comes down to what you prefer and wish to achieve, investing wise.
I’d buy an investment property, before paying off the mortgage. I know plenty of people who were going to pay off the house first before investing and then subsequently missed the housing boom. By playing it too safe, they made sure they didn’t lose money, but also made sure they didn’t make any either. Once again, it’s really up to you.
Good Luck…G7
I prefer houses. Also, I would invest now if it was affordable. Smart investing will improve your cash position and help you pay off your home quicker.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksThanks guys,
Useful information and insight. I guess I need to do more research. Also I guess since I am new to IP I am inclined to get rid of the loan first and then buy another IP. But I do realise that I might miss out on the captial appreciation and the possibility of tax savings with IP, so I am going to continue to hunt for a suitable IP.
Regards
Rajesh
Originally posted by kay henry:Rajesh,
I think it depends on where you are looking. Land is valuable when it is in scarce supply… but if you are looking say, in a rural area, then an apartment/unit could be more feasible. Generally, body corporate fees can be a killer in a lot of newer apartments, but in some places, units can be far more attractive. Units only really came into being some time in the 60’s, so you can get an idea of their age just by looking at them, often. If the BC rates are too low, it might be that the block is neglected. Too high, and you are paying for pools, lifts, common areas, gyms, cafes etc that may be attractive to tenants, but are they necessary for your IP?
Paying BC fees can be ok though, if there are problems with the IP- because all tenants have to pay, whereas with a house- you have to pay by yourself.
Make sure, if you are buying an IP, that there are no special levies coming up- these should be proposed in the last BC AGM meetings.
Land does not always appreciate- depends on where it is. But houses are considered to be a “fundamental” of investment, in my opinion, because land often *does* appreciate- in good locations.
So many things to think about re buying an Ip- perhaps ask some more general questions, and people can provide you with some more specific ideas.
kay henry
Try some of the links at…
http://www.themortgageadviser.com.au/index_files/essential_links.htm
They may help a lot in your research.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksRajesh,
When you buy an strata titled apartment – you’re usually still buying a portion of the land on which the apartment is built. This may not have been clear to you from some other comments.
Apartments in locations primed for tourism have the option of permanent tenancies or holiday letting. The advantage of this being that holiday periods can very often command strong rental tariffs.
Sometimes investors prefer to let their property for say 6-9 months of the year and holiday let the property for the remainer to maximise their returns.
Also for resources to help decisions when investing in SE queensland
See: http://www.plproperty.com.au/queensland_property_links.html
Luke Woollard
Licensee
Pacific Lifestyle Property
http://www.plproperty.com.aucomments made are general information only. you should seek professional advice for your particular circumstances.
1. Neither – are you going to limit yourself to just those two small categories ??
2. Sit down with all your available fin. #’s and go through the exercise with pen and paper. It’ll be good for you.Things needed to be considered include ;
Level of knowledge
Property types available
Funds you have available
Marginal rate of tax
Risk profile
Debt servicability
and a myriad other thingsIt really is daunting just starting out…hard to know what to tackle first. Maybe try something really small, or if completely lost, let one of the “investment groups†hold your hand for the first one of two. You’ll get ripped off a bit to start with, but it may be a quick way of practically learning what you need to know.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Rpuri,
You also need to consider your current equity and your ability to pay your debt. You can start small and sleep well at night or hock yourself to your eye balls and worry everytime you here about a possible rate/interest hike. It doesn’t matter if its a house or an apartment as long as the numbers add up right.
C2
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