Homeownership is an important goal for many Australians, but changing lifestyles, uncertain career paths, and rising home prices are leading to a new trend: “rentvesting.” This approach involves buying an investment property first and renting a primary residence.
When deciding whether to buy an investment property or a primary residence, there are several factors to consider. For example, if your goal is to build long-term wealth through real estate investments, it may be better to buy an investment property first and use it as a base to grow your portfolio. Factors such as income, savings, and employment status also play a role in determining if you are ready to invest in property. This blog will discuss some of the key considerations to keep in mind when making this decision.
Buying your Home First
Buying a home for the first time can be a significant milestone and is often associated with the Australian dream of homeownership. It allows you to customize and renovate the property to your preferences and you can live there as long as you like without fear of eviction. Additionally, there are various incentives in place for first-time homebuyers such as stamp duty reductions or government subsidies. Furthermore, your primary residence is typically exempt from capital gains tax when you decide to sell it in the future.
However, buying a home first can also come with certain limitations. Some buyers may have to compromise on location, size, or type of property due to budget constraints. Additionally, having a home loan can make it feel like there’s less freedom for travel or to make other significant life changes like starting a business or working overseas. Furthermore, buying a home first also means missing out on potential tax benefits associated with owning an investment property.
Buying an Investment Property First
When you buy an investment property first, one of the main benefits is that it can be viewed solely as a financial asset. This allows you to focus on cash flow and long-term potential without getting emotionally attached to the property or being limited by location. Additionally, you can take advantage of tax benefits such as depreciation and negative gearing, and with banks willing to lend up to 80% or more, leverage can be used to increase the potential return on your cash investment.
Furthermore, with rentvesting, you have greater flexibility in terms of where you choose to live as you can rent a property in your desired location, even if you can’t afford to buy there yet. However, buying an investment property first means missing out on first-time homebuyer grants, CGT exemption, and the stability of having a primary residence to live in.
aspyragroup is a national platform that provides property investment services for savvy investors looking to build a successful portfolio. We offer more than just market insight, we provide a comprehensive approach to investing through our Portfolio Approach strategy, as well as personalized guidance and education to assist in making informed decisions. If you are seeking a dependable advisor to give expert advice on creating your investment portfolio, reach out to us. https://aspyragroup.com.au/
