My boyfriend and I are just about to buy our first property, and are thinking of buying an investment property in Queensland do you think this is a better bet thean buying in Sydney to live in?
G’day Emma,
The answer to your question can be another question – ” How long is a piece of string ? “
What I mean is that what is good for you may not be good for someone else, and vice versa.
My suggestion is do some serious number crunching.
How much will it cost to buy in your preferred area of Syd ? What are the capital gains prospects of Syd ? How much value do you personally put on “owning a house of your own” to live in ? What are the costs associated with your preferred area of QLD ? Realistic potential rental income, capital gains, management costs, etc for a property in QLD ? Will it cost more to rent in Syd and buy in QLD, or just to buy in Syd ? What would you / could you do with the dollar difference if you choose the cheaper option? What are your goals ? What are your boyfriends goals ?
By answering the above questions, you will find more questions that will also need answering….
Only you can decide which is best for your situation. Maybe try a search on this ( and other ) forums along the lines of “renting vs buying” ?
I hope this helps !
BDM
P.S. Hint : The piece of string mentioned above can be any length you want it to be.
Hi there.
I agree with BDM, there is more questions that need to be asked. Firstly let me say that you need to distinguish between whether you want a home to live in or an investment property. They are both very different, chalk and cheese infact. A home that you live in is not an investment, sure it has the potential of capital gain but what do you do then? If you sell and take the gain you will be faced with the problem that you sold at a high point in the market and are now trying to buy back in at a high point. You’re bargaining power is limited since you need a place to live and unless you want to take a life style cut and downgrade your next home purchase you are financially the same as you are now. I hope that makes sense. You should never consider the home you live in to be an asset, not even when the mortgage is paid off. Why is this you might ask, well while the mortgage might be paid off, it still costs you money to live in the home, there are rates and bills that need to be paid, meaning that money is leaving your pocket.
It’s a tough situation because most people like to have a place that they call home. Whatever you do just remember that an asset puts money into your pocket while a liability takes money out. On the basis of this definition your home is not an asset till you sell it for more than you paid plus opening and closing costs. Then you are left with the problem of what now?
My 2 cents.
OK, Here’s my tip.
Especially for the first IP, buy in an area you know VERY WELL. If you know that area of Qld, fine. If not, stick to where you know.
You should be able to look at any house any know pretty much what it’s worth. That way, you’ll only pay what you should. It can take a while to catch up on an overpaid purchase price.
Having said that, if that’s the only place you can afford, better that than doing nothing. Investigate and do LOTS of due dilligence. Verify prices as much as you can. If you’re happy with the deal, do it.
All the best,
Simon.
Hi Emma,
Thanks for your post and welcome to the forum.
I think you have been given some excellent tips on this post.
Might I just add that you firmly understand the difference between positive and negative gearing.
What is it that you expect from your property?
Do you want capital gains or cashflow?
What’s the end goal? Financial independence?
Only once you have answered these questions can you decide what type of property that you’d like to own.
Thanks again for your post and keep the questions coming.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
of course you could turn your home into an asset by renting out a room to a student etc – its tax free cash in hand and will eventually become +ve geared – provided you can live with a stranger in your place using your stuff.
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