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Investment Property instead of First Home?

Discussion in 'Real Estate' started by Angie76, 2nd Nov, 2010.

  1. Angie76

    Angie76 New Member

    2nd Nov, 2010
    Melbourne, VIC
    Hi. New to this forum and feeling very lucky to have found it - I need help!

    Background - my partner and I (both mid 30s) are a ways off affording our own home. We always thought we should hold off on buying an IP as this would mean we would forfeit various grants available to us. But I'm starting to think that we might be better to forget the grants and get into the market as investors because presumably, that will bring us closer to being able to buy our own home.

    I am at home with two very young children and partner works full-time.

    Question - if owning our own home is anywhere from 2 -10 years away, are we better to enter the market as investors?

    Thank you in advance.
  2. Billv

    Billv Getting there

    15th Jul, 2007
    Sydney, NSW
    Hi Angie

    Welcome to the forum.
    It depends on where you want to live and what type of property you buy. If you were to buy in Melbourne today you could be buying into an already expensive and perhaps overvalued market which could correct slightly or stagnate for a long time.

    With this in mind, you can afford to wait.
    On the other hand if our economy keeps improving and the RBA keeps increasing interest rates it could become harder to get a loan so you could find it more difficult to buy your dream home.

    However, don't be too concerned with this because you won't be the only one in this situation and as interest rates go up there will be further downwards pressure on property prices so waiting could be of benefit.

    An investment property will be easier to manage than a PPOR because you'll share the burden with the tax office
    but there is no need to rush and buy something right now.
    Time is your friend :)
  3. Paul Dobson

    Paul Dobson Member

    22nd Mar, 2007
    Fingal Bay, NSW
    Hi Angie

    We tend to agree with you, i.e. enter the market now as investors. However the trouble with this approach is that it takes so long when you have to wait for market driven capitial gain to move you forward.

    We believe our long term wealth is measured by the amout of equity we have in property. To accomplish this we use both positive and negative cash flow properties.

    Our +cf properties are properties we buy and on-sell with vendor finance and our -cf properties are the properties we plan to hold forever ;-) Our +cf properties maintain our lifestyle and support the -cf on our long term buy and holds.

    We've bought and sold lots of our +cf properties but not sold any of our buy and holds. They're our long term wealth. The +cf properties, for us, are just a cash flow business, just like any other business you might own.

    Using vendor finance to help our portfolio building works for us.

    Cheers, Paul

    Paul & Karen Dobson - Vendor Financiers - Ph: 0447 973 235
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