Kristy prides herself on making her clients feel welcome, understood and in safe hands from their very first meeting. Her 16 years of residential and commercial experience in the Melbourne property market has taught her to ensure every ‘i’ is dotted and ‘t’ crossed and how imperative this is when transacting property.
Is it time to grow up and buy a property?
For most of us, we’ve grown up with the idea that owning your own property is part and parcel of living the Australian dream. But is this dream really worth all the sacrifice?
With housing affordability a major topic of discussion, it is pertinent to break things down to help you decide if it is time to buy a property.
Renting offers flexibility to live in your ideal area, move when you want, no hassles with maintenance and no long term financial commitments to inhibit your lifestyle choices. The downside to renting is the lack of stability, potential rent increases, little control over aesthetics of your home and paying a monthly rent towards someone else’s mortgage.
Buying is difficult to get into, a long term commitment with a mortgage and maintenance costs, possibly not in your ideal area and could inhibit your lifestyle choices due to financial obligations. The upside of buying is that your money is going towards an asset rather then possibly being frittered away on ‘things’, you have the security of a long term address and the option to enhance the property to suit your needs.
So what are the options for people toying with the idea of dipping their toe into the property market?
Renting and buying an investment property
Continuing to rent and buying a property purely for investment. This will keep emotional decision making from rearing its ugly head and get your money working for you, possibly harder due to higher capital growth levels that can come from a well selected investment property. Owning an investment property and being a landlord isn’t something to take lightly though with outgoings to be paid, the risk of vacant periods and maintenance costs. Although the majority are tax deductible, they can make a dent in your budget each month. If you change your mind and want to buy something to live in, you either have to sell the investment property in the short/medium term and possibly not realise its capital growth potential OR hold the property to start building a portfolio if you are lucky enough to be able to finance both properties.
You may also decide to move into the property which may be a compromise in terms of level of accommodation or your choice of area. Either way, the property’s original purpose is altered. You will also be missing out on considerable stamp duty savings as a first home buyer if you do not live in the property.
Buying a property to live in
If you have been able to find enough pennies behind the couch to buy the property you love in the area you love then you’re set right? Not always. Unless you have a crystal ball, you cannot predict what curve balls life will throw at you, babies, breakups, job changes etc are all factors that could make your dream property not quite so desirable if you’re faced with a shortage of space, a long commute or financial stress. The upside to buying a property to live in long term aside from the obvious is not having to pay stamp duty each time you decide to move house, a huge saving. If you can’t afford your long term property but still decide to buy to live in, it is imperative that you choose wisely taking into consideration the growth potential. As you may decide to sell sooner rather than later, you don’t want to get caught short when it comes time to sell.
Whether buying an investment or lifestyle property, selecting the right asset, doing your research and making wise decisions is vital to opening the door to financial freedom in the long term.
So, the long and the short of it, an investment property is a great option for those of you who have a clear long term picture, can hold the property for at least 10 years to maximise its capital growth and are happy to continue with their current living situation. But if you want to keep your options open and see what the world offers, best to not enter into a large financial commitment until you can give the responsibilities of owning a property the respect it deserves.
If you feel that you could benefit from professional, independent property advice, please feel free to contact The Property Bureau on +61 3 9018 7870.
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