With Melbourne property prices continuously rising, it can be difficult to find and purchase your “dream home”: a property you want to live in that’s also located in the suburb of your choice. That’s why many first home buyers are opting to buy investment properties while renting. The ‘rentvesting’ trend seems to be here to stay due to the flexibility and lifestyle benefits it offers first home buyers. However, you need to consider the advantages and drawbacks of each path so you can feel confident about your choice. If you’re deciding between buying a home or an investment property, let us walk you through the options so you can see what might suit your needs best.
You should consider buying an investment property first if:
Maintaining your lifestyle matters to you
With Melbourne property prices skyrocketing, people entering the housing market can find it hard to purchase in an area they especially want to live in. What makes an area desirable comes down to personal preference, but for many, the attraction of the amenities, parks, cafes, shops and entertainment of urban areas is hard to beat. By renting in the area you love, you get to still enjoy these cosmopolitan perks without “putting your house on it”.
You work in the city full-time
Many first home buyers with demanding city-based jobs are choosing to rent closer to the CBD while investing in a property they can afford in the outer suburbs or rural areas. This option means you can get into the property market without having to give up your CBD-based job and your urban lifestyle. If properties in your desired suburbs are out of your budget, you might choose to buy further away. That means you’ll have to factor in extra travel time and cost if you commute to the CBD.
You don’t want to get too attached
Buying a property as an investment rather than to live in straight away also means that you may get less emotionally involved in the purchase and make more pragmatic decisions about the property. A common trap for first homebuyer is that they can get too attached and end up overpaying for houses. Before buying your home, consider whether you’re willing to forfeit your urban lifestyle and increase your commute in order to live in a home you own.
You should consider buying a home first if:
You don’t want to take a big risk
Any property purchase carries at least a small amount of risk, but if you buy an investment property and overcapitalise to do so, you’re putting a lot on the line. If you buy an investment property to rent out to tenants, but the rent doesn’t cover your expenses (i.e. your mortgage on the property, council rates, owners corporation and other outgoings), you’ll have to make up the difference while continuing to pay your own living expenses or rent. If this gets too overwhelming, you might be tempted to sell, which means you’ll have to fork out extra in capital gains tax.
You want to access first home owner perks
Buying a home to live in first certainly, has its benefits. It allows you to quit the renting game. Plus, you can access the financial perks of being a first home buyer. The recent abolishment of stamp duty for homes under $600,000 allows you to enter the market with no stamp duty payable. Or, if your home falls between the $600,000 – $750,000 mark, you could be eligible for first-home buyer duty exemption or concession. Your principal place of residence is your own little tax haven, and you won’t pay capital gains if you decide to sell.
You’re sick of renting and willing to compromise
There’s nothing quite like owning your own home. Settling down and making your home your own can bring people a real sense of security and freedom (you can even put nails in walls if you want!). The reality of having children or even pets makes owning a more attractive prospect than renting. But for some buyers, this may mean a compromise in location. If you can plan ahead and save money by living at home with parents or creating a second income to go towards a house deposit, you’re on the right path to homeownership.
Buying your first property is a daunting task that takes time and extensive research. Whether you start with an investment property or buy your first home to live in, it’s important to think about your short and long-term needs. An experienced buyer’s advocate like Industry Insider can help you make an informed decision by providing industry expertise, market insights and negotiating skills, to ensure you make a smart property purchase.
At Industry Insider Property, we specialise in buying established family homes in the inner ring of Melbourne, Bayside, and the beautiful Mornington Peninsula. If you need any assistance with buying, don’t hesitate to speak with one of our Property Buyer Agents on +61 8374 7652 or book a Zoom call here
https://calendly.com/propertychat/discussion-with-industry-insider
Industry Insider Property
Level 3, 489 Toorak Road, Toorak 3142
+61 8374 7652
+61 402 346 810
industryinsider.com.au
