With property prices reaching record heights in many parts of the country, we are seeing a lot of prospective buyers wondering whether or not they will ever fulfil the great Australian dream of owning a home.
One of the major issues that first homebuyers face is that property prices in many inner-city areas are out of reach on the average wage, however these areas are also where people want to live.
But, young buyers can have their cake and eat it too by buying an investment property in an area that is more affordable, while maintaining a rental in a more desirable living location.
Rather than waiting years to save up for a deposit for an inner-city residence, it is worth researching middle- and outer-ring areas that look set to rise. Buying an investment property will help you build up equity over time that you can use later on to buy a property in your dream location.
There is a lot of stigma around renting, however rent money doesn’t have to equal dead money, as the old saying goes. There are plenty of people who have made solid investments while renting and it can end up being a smarter choice than buying a home to live in, particularly if the home you want to live in costs more than a $1 million and isn’t likely to see strong capital gains for many years.
Ideally, the rent money you receive from your investment property will be able to cover most, if not all, of the cost of the rental you want to live in. This type of strategy gives people a lot of flexibility in their living situation, while also being an alternative pathway to home ownership.
So for those who have become disheartened with the state of the property market, the idea of renting whilst building a property portfolio might be a wise financial move that could pay off well into the future.
Do the sums and have a chat to a financial advisor to see what strategy will work best for you. You might find that your dream of home ownership isn’t as far away as you think.