More young Australians are choosing to invest in property before they buy a house to live in.
It’s a growing trend and there is good reason for it.
Housing prices are on the rise and more and more young people are opting to stay living with their parents to save. In fact, a 2013 ABS survey revealed that over 31% of 18-34 in Australia are living at home with their parents. This is a 4% increase from 2006.
Even though these young people are saving, often they can’t save fast enough to get the home they really want.
That’s when investing becomes a great option. Here’s why:
- Investing first gives you an asset you can later use to buy your dream home
If you invest in property, and you keep your living expenses low by renting somewhere cheap or staying with your parents, your tenants will be helping you pay off most of your mortgage. This helps you build equity. When you build enough equity you can use it later to fund your own home. Or if you have purchased in a growth area, you can sell the property and generate a healthy profit.
- Investing first may allow you to buy your dream home in your dream location
Many young people don’t want to live in an off-the-plan home 50kms from the CBD. Investing first may allow you to purchase in the area you want later, such as close to a beach or near your favourite shopping precinct. Investing gives you an asset you can leverage off either in your equity or by selling the property when you know you will get a profit.
- You get tax benefits, especially if you’re a high earner
There are many tax benefits investors can utilise, especially those paying large amounts of tax. Benefits include claims on all property related expenses such as maintenance, mortgage interest, rental fees, insurance, and also on depreciation.
- You can generate an income
When you invest and manage your property effectively, your rental income should cover the mortgage repayments. Using this approach, it is likely you won’t incur many out of pocket expenses meaning you can still save for your home or other personal goals. You can’t always do this when you purchase your first home.
- You’re not tied down
Want to go on holiday for a year? Well, it’s likely to be much easier when you have an investment, compared to your own house. While you’re on holiday, your tenant is still paying rent.
Do you want to invest before you buy? We’ll show you how. Call us on 1300 652 842 or email property@whitestar.kinsta.cloud.