Hello, my husband and I are looking to invest in property.
The property we live in is currently valued at approx 1million – we own 25%. It is a three bedroom Sydney home that would suit our families needs for 5-7 years.We have the option to buy the additional 75% for 750K (with 100K deposit) however, with our current financial situation it would be a stretch.
We also have the option to borrow 500K + our 100K deposit (with the idea to borrow the rest further down the track). This option would still involve us paying a lot of interest and would make it difficult to buy any additional investments any time soon.
The third option is to rent (max 750p/w) and buy positively geared investment properties until we can afford a family home. We would have $300K deposit to start with.
As much as we would love to stay in the house we currently live in, financially there appears to be less ‘dead money’ in the latter option. Ultimately our goal is to create an income through property investments.
Is there anything I have missed? Or does anyone have any advice?
Hi Melissa,
A good question, and one oft-asked – “Do we invest before buying a PPOR (own home)?” Click on the link below, then check out the third post in that thread. It takes you by the hand and shows you the answer. Of course, it may not be the WHOLE answer, as it is written as though “financial reasons” are all that exist.
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/
If one looks from an “emotiional perspective”, or a “lifestyle perspective”, then there could well be other reasons why the answer given would NOT work for you. Still, it is a start – and has covered the important points very well. I hope it helps to give you a fresh perspective.
Benny
Hi Benny,
Thanks for that link.I think for a while we have been looking at things from an emotional perspective though, I could not shake the feeling all our money will be tied down to one property for a very long time.
Thank you for your input, financially we will be better off renting.
Another question: With a large deposit, is it better to buy two investment properties or to start a little more slowly and put all our money into one?
Melissa
Hi Melissa
Welcome to the forum and I hope you enjoy your time with us.
Buying real estate is a matter of quality v quantity however that is not to say you buy one expensive property.
With lenders tightening up their criteria for investment lending we are finding more and more forum members wanting to get in whilst they can however we normally bedding the first deal down first before going again.
Loan structuring and the right property selection to do the job is of prime importance.
No point in having a property increase in value with a very low yield if you are unable to access that equity because of lending constraints.
I have always been one to encourage our clients to take what they can when it is available rather than when they need as often the Bank won’t agree to an equity increase etc. If you structure the lending correctly and find you don’t need access to the funds then No interest is charged on the unused money.
Cheers
Yours in Finance
0-40 Properties in a decade. Email me for a copy of my API interview.Richard Taylor | Australia's leading private lender
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