Hey all,
I have read Steve’s book and have been inspired to try the investment property thing out. I am 36, married and currently have about 30 – 40k AUD to invest plus cash in other countries. But at this stage my wife and I are wanting to get into property of our own as we have a family on the way. I had considered splitting the deposit and investing in 2 properties (but my thoughts are the deposit no where near enough). I am tired of paying rent and want to put the potential $500 + that I would paying in rent into my own place. In Steve’s book it obviously suggests to go cheaper properties to build a portfolio, to either rent or do refurb to sell on again, which is appealing to do, but I am now wanting to have a place that I can get my family into that isn’t just an apartment.
So basically I am asking for advise on what direction do you you all think is best. Go for a cheap place for us to stop paying rent, or start building the portfolio with the money we have and keep renting? I had also considered getting a co-investor to go into purchasing our family home, so we would potentially split the loan, but we would pay the rent covering the loan/s. This would mean we could get a decent sized property, but not have to invest our full deposit, allowing us to invest in a CF+ place.
hope this all makes sense, would love to hear any thoughts on others experience, and advise
cheers
Mike
I was faced with a similar dilemna. I realised that there were two seperate issues here – wanting the emotional security of living in a "family" home, and investing. I realised that with rent only around 2% of the value of the place I'm renting, and interest alone being double that, it makes better sense for me to rent, while investing elsewhere.
However, that applies to an expensive suburb of Sydney.
Google "renting while investing in property". You will find in depth discussions of this out there. Basically do a simple analysis of whether your ideal PPOR type property would likely increase more over 5 – 10 years compared to an IP, and can you handle the possible instability that comes with renting.
Agree with the above. It depends where you want to live. If you want to live in an area that has a low yield you are better off renting and buying in another area. You can deduct expenses etc.
Getting a co-investor for a family home is not worth the trouble (in my opinion). Too complicated with the amount each pays and tax for the other person if you are not paying market rent etc. If it's an investment purely that's different.
You need to look at where you want to live. Work out the numbers and compare it to if you bought an investment instead and rented.
Of course all this doesn't take in peoples desire to own a home to live in. Taking the emotion out of it- let the numbers do the talking.
Awesome, yeah I am in the situation that most of the work I do is located in Sydney, and the prices are insane there at the moment, I am hoping the bubble will pop and the prices will decrease, but I imagine that if that happens, they will bump up the amount needed for deposit. So other words I think the return on Sydney property diminishing at this point, at least that is what I have been observing. This is why I was considering getting co-investor or parents as I am not sure we would have the 20% deposit to even get something that is even semi decent.
Knowing that I am somewhat locked to Sydney, I had consider investing outside Sydney in the meantime, possibly do some refurb properties. Just from looking at the Sydney situation, (and I would need to do some numbers) that the cost of renting will potentially get my family a home that will work for us as a ‘family’. Where as purchasing in Sydney would potentially land us in debt up to our eyeballs, in a property not over suitable for a family. I am wanting to make sure we are not going to over capitalize on our first home purchase, and at the current state of property in Sydney I don’t see any way around it.
What are you thoughts on the Sydney market?
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