In today’s economy, people scouring the market – especially first-time buyers – are tearing their hair out asking themselves the same question.
“Do I buy a home or an investment property”? Am I jeopardising my future if I choose one or the other?
Listen.
There is no right answer.
If you’re itching to buy either a dream home or investment property, but can’t figure out for the life of you which one to choose, the first step is to look in the mirror and answer yourself one simple question:
“What do I want in life?”
When you’ve answered that ultimate question, the choice becomes simple.
Why you should buy a dream home
Buying that dream home is an excellent option for a number of reasons:
- You’ll feel huge emotional satisfaction. It’s the Aussie dream, after all!
- You can forget about paying rent (i.e. dead money) forever.
- You can play around with the property as much as you like – renovate, build, decorate, demolish. You are the master of your own destiny (subject to council zoning rules, of course)
- You don’t have to worry about tenants destroying your home or not paying your rent on time – you’re totally in control
- You can save on capital gains tax! Confirm this with your accountant, but if you actually buy a home, live there for a while and move out, you can rent it out for six years without paying capital gains.
Why you should buy an investment property
Although there are many benefits to owning your own dream home, there are benefits to investing (as well).
- Chances are (especially if you’re a first home buyer) you can’t afford where you want to live. If you buy an investment property, you have a tremendous amount of more affordable (yet still awesome) options.
- Passive income stream! Sit back, relax and watch your rent roll into your bank account without so much as lifting a finger.
- You’ll get more borrowing capacity if you invest. Banks will look at the fact that you’ll be earning rent, which makes them think “Oh, you can service this loan. Perfect”.
- You’ll get some pretty huge tax advantages. The debt on your property will be tax-deductible because your property is income-generating. That means you can claim back your interest repayments and other expenses on tax! (Confirm all this with your accountant, of course)
- You can still have some flexibility. If you “rentvest” (rent where you live, and invest where you buy), you still can chop and change properties as you please. Which is kind of hard to do when you own where you live.
Don’t hold back: what sounds better for you?
The challenge for you now is to decide the lifestyle you want for yourself.
Does it suit investing or buying a dream home?
Look in the mirror – and picture your life 20 years into the future.
- If your dream home is a Sydney waterfront mansion (and you can’t quite afford it right now), then perhaps an investment property is the better option. You may be able to one day by your dream home using the equity you’ve built up in your investments.
- If you love to move around and aren’t quite ready to settle yet, consider an investment.
- If you’re looking for some security, no longer want a landlord and property inspections, and your dream home is within your budget, then perhaps now’s the time to pull the trigger – and buy that home.
Like we say – it all depends on your circumstances!
We know you’re a go-getter and don’t like to delay these kinds of decisions. So give us a call and the Investorfi team can help you make the right choice.
