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Buying Your First Home Versus Buying An Investment Property

Written by Posted On Wednesday, 06 July 2016 05:06
Buying your first home versus buying an investment property Buying your first home versus buying an investment property Buying your first home versus buying an investment property

Popularised and certainly a hot-topic in Australia at the moment is the rising cost of purchasing a home and specifically many younger Australians feeling like they will never be able to save enough to enter the property market.

This begs the question of whether it’s a fiscally responsible option, especially for younger Australians, to purchase an investment property as their first step into the property market rather than buying a home for themselves.

So why are many Australians choosing to invest rather than purchase their own home?

Debt management is a large factor when considering an investment opposed to purchasing and occupying your own home. This categorically comes down to “good debt” against “bad debt” where if you’ve chosen to invest you’re allowed certain tax deductions, your investment generates rental income to assist with covering mortgage repayments and if you’ve been diligent in your research you’ll have chosen an area with proven capital growth. These advantages are not enjoyed by folks who have chosen to buy and reside in their own home unfortunately. 

When considering the benefits of opting to invest rather than occupy, the advantages of tax deductions and rental income certainly make it easier for a first home buyer to manage mortgage repayments, rates and other miscellaneous costs that may occur. This is also compounded if as a young home buyer you still reside at home and have the option to live rent free while focusing on your investment. 

For a lot of people looking to purchase a home, the cost associated to live in the area you really desire is so far beyond our reach that it serves to demotivate rather than inspire us to be better savers. Another advantage of choosing to invest first is the platform it allows when thinking about the long term.

Any investor worth their salt will tell you that investing in property is more so a long term ideal rather than for the short term (although if you play your cards right, short term investing can be lucrative too) and as a young home buyer it can be difficult to think of where you will be personally and financially in five, ten or even fifteen years. Remember it is always prudent to seek appropriate financial advice from a planner, advisor or debt management company. 

If you’re investing as your first home the hardest obstacle to overcome is that you personally may not like the layout, position or styling of your investment home however it may be the perfect solution for a family who would like to rent it from you. You must separate your own emotions when buying an investment home and look at key indicators that show if your new investment is likely to perform. 

So which way should I go?

With anything relating to serious decisions you’re considering for your financial future, referencing trusted financial sources will never steer you wrong. Do your research on the area’s you’re considering buying in, look at what the growth rates are for those areas, what amenities are close and attractive to potential renters. A well thought out plan will never go astray in ensuring you stay on target to achieve your goals. Should you wish to know more about your options as a potential investor, the Zenon Group (Financial Planner gold coast) provides a no cost service that provides guidance toward structured investments, debt management and effective tax positions and are located in the Gold Coast if you’re a local. 

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