Best Investment/Financial Strategy

Hello aRope99,
I suspect you will get a few answers to this question so I will travel lightly and make no recommendation.

Option 1
Sounds good but I would want be looking for a property that either grew in value, paid good rent (or both) before I was looking for a property that provided good tax deductions. That being said if you can get a property were capital gains are likely that rents well and is new or new near it is a perfect storm and will help with tax minimisation. There is additional stress in being a property investor and you need a buffer particulary with another child coming on.
What are people saying about the Adelaide property market, especially the area you mention? Are many people moving in, is there low rental vacancies and so on …

Option 2
My least favorite option due to opportunity risk, if you buy today at today's price in 5 years time the property will be worth more and each dollar paid will be worth less.

Option 3
That is how we did it, brought a home, waited and used the equity to buy another in 5 years time. BTW we did not pay off much on the mortgage, see option 2. in 21 years $89k property now worth $450k still owe more than $89k.
So maybe put your savings in an 100% offset account so that comes the time for a slightly better home you have a deposit at hand …

Regards

we had the option of buying or rent and keep saving. We decided to buy for a couple of reasons. First we were sick of renting and wanted something we could play around with. Second we were able to grow equity quicker than saving by renovating. And third interest payments are slightly less than comparable rents. I find it alot more satisfying having my own “castle” than renting. Were in a similar situation 80k income with a baby and partner at home. We managed to save about 40k in 9 months before bub came along and then bought. We still save as much as we can, utilise offset account and use 55days interest free credit cards to maximize the benefits of offset account. I wouldnt have done it any differently

If I was in your shoes I would go with Terry's suggestion.

Whichever option you choose just make sure you do not over extend yourself. Interest rates are set at pretty low levels at the moment.

When doing your sums make sure you factor rate increases into your household budget.

arope,
 
Why not just contact Jamie who has already responded to your post and has considerable experience in the matter and get him to organise it for you. It is impossible for any of us to give you a recommendation without knowing all the pertitant facts.

Cheers

Yours in Finance

Hi Freckle,

GFC 2 has already started, in-fact we never really go out of GFC 1.
Its only money and money only buys you options, the key to being wealthy is to train your mind, your mind is your greatest assets.

The economy will always go up and down, its happened in our past, our present and our future, the key is to adapt to any situation and live, not live in fear.

Cheers

A couple of things.
Owning your own castle is overrated! Believe me when I say this as it is based on almost 2 decades of showing people how to get rid of this debt, or financial cancer as I call it.
Once you get a mortgage, and are on 1 income, forget it. Life will stop dead, you won’t be able to borrow any more money for investment as you’ll be mortgaged to the eyeballs and until you double your income or your wife goes back to work this won’t change.
Meanwhile 10 years will fly by and you will still have a mortgage on a home that may be worth a bit more, but the mortgage will be much the same.
Short term pain for long term gain. Renting for the next 3-5 years won’t kill you, but if you invest in the Right places, you could put yourself years ahead in terms of your mortgage size by using the money made from your investments as a bigger deposit.

Secondly, this is for all the alarmists out there. Sure, the world is having some financial problems, but I can assure you, there is PLENTY of money to be made in Australia over the next 3-5 years, if you know where to look.

In summary, do what your parents did and you’ll end up like them. Most of them have nothing now in their retirement because they wanted the great Australian dream, and now they’re up the creek without a paddle.
Do what the numbers are telling you to do, suck it up and continue renting for a while, while investing and you WILL reap the rewards.

99 here’s something to contemplate.

Forget the 10% deposit. You’ll basically loose that in entry costs. Scratch $30k

Property in general is moving south but of course everyone remains optimistic to the point of delusion that somehow but somehow a miracle will happen in the world and the trillions in global debt that can’t be serviced let alone paid back will miraculously disappear somehow. But Australia is different even though it’s economy is about to officially go into recession in the coming months.

So if property continues to slide you could within 12 months have negative equity. It will only take a 3% move and you’ve done your doa!!

Here’s a simple risk assessment.

…hold onto your money = 100% guarantee you’ll still have it later

…buy now = $30k out the door, 80% chance property will loose value, 10% it will hold, 10% it will increase

Pretty simple really. Hold onto your money. Only fools buy before a crash.

Hello Arope
You are back at the start of your questions I think?

"Do you think property valued at $300,000 now would increase more than $45,000 in 5 years time?"

It depends who you ask as shown above, it also depends were you buy.

But yes I think a property could increase in value by that much over that time.

"Is it still worth purchasing a property now?'

If you are buying a good property for reasons that make sense yes, plenty of homes are being bought and sold as we read and write this.

Just a thought but how many liters of fuel (or other commodity) will $45k buy today and how many will it buy in 5 years time?

Nick

Hi arope 99

I have a question for you – I was wondering

How would buying an investment property affect the First home savers account?

Would you still qualify under the scheme?

The answer is yes, so just invest first and make your deposit bigger, THEN go and buy your own place.

99, I think you're over thinking the whole process. It's simple, if you want to buy your own home, then understand that financially it's going to cost you in the long run. If you rent now, invest in the right areas, and you can delay your gratification, then you could even look to buy your own home outright.

This is a real cross road for you and this decision will change your life in MANY ways, so make it wisely.