Hi,
My partner and I are currently renting a wonderful place in Adelaide which we don’t want to move out of. But, we can’t afford to buy in Walkerville because it’s too expensive, even for a small unit. But, we don’t want to waste years while we save, if we could somehow buy a rental property elsewhere and recieve income from that. Because properties which are likely to appreciate are more expensive, is it ok if we buy in a less attractive suburb if we are only after more income from the rent? Or is better for us to keep saving until we can afford a better investment?Hi Vlad.
Welcome to the board.
With rentals yields in Adelaide at present you may find that the only cash-flow positive properties will be in “less attractive” suburbs. I think most members on this board would agree that investing in property earlier will be better than “saving”, if you mean saving in a term deposit etc. Of course, everything depends on yur personal circumstances.Terry
FinanceVlad,
Two questions…..
1. What are you aiming to achieve ?
2. Do these investments get you closer to your goal or further away ??
Enjoy
AD [:0)]A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithThat was the exact same situation my wife and I were facing not so long ago in 2000. We were faced with the situation of
1. either buy a unit for ourselves in Sydney CDB (we both worked in Sydney). 2 Bedroom units with single bath was costing about $450,000. Which meant that with $80,000 we begged/borrowed/stealed/saved the morgage repayments would have been around $650/week. Strata and council rates was another $100/week resulting in a total dent to our disposal income of $750.
2. buy the equilivant of $450,000 worth of units in the suburbs of Sydney. Fortunelly we found a suburb in sydney where units were selling for $70,000 but was renting for $140/week. With thoes rations we could buy 7 units returning us $980/week. Outgoings would cost us about $300 per week. So holding onto 7 units in the suburbs accually was paying us $30/week. With that we could rent the same unit we were gonna buy for ourselves – except on a higher level for $380/week. This meant that we would only loose $350/week from our disposal income for rent insetead of of $750. We were happy with that because it means we still have heaps of money left over to save some more. We thought that the CDB would grow much faster than the suburbs, so even though we could save more, our assessts wouldn’t grow as fast.
In the enddecided to buy in the suburbs, CDB prices stagnitated if not dropped a bit and suburb prices went through the roof. We were luck I guess. But the though that someone was subsidising us to live in the city by $300/week was a very attractive to us.
Thanks everyone for your advice.
I’ve decided to stay where I am renting, and saving a deposit. It’s cheaper. Now is probably not a good time to buy with the end of the housing boom in site anyway. So, best to hold off for a couple of years, save up a decent deposit and then scout for a house that people have to sell once the interest rates go up.
Thanks again everyone.
Don’t wait!!! If there’s one thing I can say about my dabble in property it’s the longer you wait to get in the harder it is… that’s what everyone I talk to says when they congratulate me on getting in so early (even if I did cock it up slightly by not doing enough homework first!) If it were me, I’d buy the investment property(s) in the less attractive areas & use the income from that to save your deposit (supplemented with your own ‘spare cash’ from your salary where possible) in a high interest bearing account (some net-operated accounts are advertising 4.85% at the moment – you just have to be prepared to transact electronically & have no keycard access to the cash = what you really want anyway to force you to save!). Some of the more astute investors may disagree with this approach because the money isn’t ‘working’ for you while it sits there accumulating but it’s certainly better than sitting on your hands for the next few years and buying in when the interest rates are back on the way up again…
The topic ‘buying a rental whilst renting’ is closed to new replies.
