Hi,
I am currently renting a one bed room apartment of $650 a month, my annual income is about $45000 before tax, I have got $20000 in the bank as a deposit, should I buy a house for myself or a investment property at the moment? My friends are suggesting me buy a house for myself, because the price for properties are very high at the moment, they said it’s not a very good time to get into property investment now, any suggestions? Thanks!!
Well, in most cases buying a home for yourself to live in will be more costly than buying a home as an investment and renting it out.
If you were to take the investment option, than it’s about where you buy, rental returns ect.. Don’t forget, when the market is down, it’s the best time to buy..
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auI’m with GPS on that one, makes perfect sense to me.
resiwealth
I disagree with your friend about not being a good time to invest – it’s a matter of finding the right deal for your investment strategy. If you look around, there are still properties out there that are good investments.
Pete
So are you guys saying that if you were living in a house and paying rent but had enough money for a deposit you would recommend you stay renting and buy an investment property instead?
This would have its own tax advantages but would you came out better off this way?
and if you did this would you get the FHOG and live in the house for a while then rent it out?
You will often find that by purchasing a property for investment, will be tax deducable and often you can rent a better property than you could afford to buy and by purchasing a property and putting a tenant in you can buy a better investment property.
I think I have confused myself
Nigel Kibel
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That does make sense i think. At the moment anyway with high prices and lowish rent. Thanks.
I am thinking wont it be better to buy a home instead of an investment coz it has no CGT when selling. Real cash flow at the end is higher with a home instead of CGT.
and also think of the eventual outgoings of ur cash flow with an investment property (as int exp>rental income, u pay this from ur own cash)This is true however the amount that you pay out of your pocket for an investment property is also coming out of your pocket in your own home to pay the interest on the loan. The difference is that if it is an investment the tenents are hellping you pay this interest. You are right about the CGT however the benifits here are quickly eroded due to the loss of the tenents income you get if it was an IP.
I would go with buying the home to live in for 6 months and then moving out to rent a place to live and rent the property. That way, if in NSW, you pay no stamp duty, you get the FHOG, you get a 6 year CGT exemption, the whole property becomes fully deductible and your overall cost to hold the property should be less when it is rented out depending on how much you pay for the place you rent to live in.
Also, whoever is telling you prices are high and rents are low at the moment is a bit confused. Prices are coming down quickly in many areas and rents are stable or moving up as people are staying away from property in many cases. It is a great time to find some bargains!!!
TMA
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I think that you are right about the house and rent prices however from what i can see there is still a big gap between the price and rent which is why it is extremely hard to find a positive cash flow property. I do think you are right but we are still in for a bit of a wait before prices are low enough to find really good bargains.
There are always bargains to find in any market. There is never a time to wait but always the time to be looking for the right purchase.
TMA
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