Buying First Home Vs Investment Property

Buying first home as an investment is truly a dream of every Australian. It ensures success, security, and settlement. To fulfill their classic Australian dream, first-time buyers often rush to buy their first home.

But what if there is another way around to make this dream true, making some profit simultaneously? Before we get into this discussion, let’s discuss why this is the best time to invest in the property market.

I hope that in this year to come, you make mistakes. If you are making mistakes…you’re Doing Something. “

Is This The Right Time To Buy Property?

When the corona pandemic distressed the whole world and obstructed all lively growths, the real estate market in Australia followed an unexpected trend. While the entire world was shutting down, the investment activity in Australian real estate marking was escalating to an all-time high level.

This drastic situation of the pandemic created opportunities for the buyers as the home mortgage rates dropped down to historic low levels and are still lower than ever before. Now that you know Australia’s current real estate market situation and why this is the best time to invest, let’s get back to our main topic of discussion.

Investing In a Property Before Your First Home – Is It A Good Strategy?

Spending your money on getting your first home or on investment property solely depends on your situation. Whether you buy your first home or an investment property, both have their advantages and some disadvantages as well. Let’s look at some major aspects of buying a first home or investing in a property instead.

Buying Your First Home To Live In

Buying your home first is fantastic. You get a place to call your own, and there is full freedom that you lack when living as a tenant. You can renovate your home, and expand it in the future.

With your own home, you can choose any lifestyle you want without any restrictions from landowners. You get full ownership of your home and everything with it. Even if you buy a home on a home loan, it is better to repay your mortgage than somebody else’s by paying monthly rent.

Buying First Home As An Investment

Buying your first home as an investment can be a potentially lucrative move. You can live anywhere you want to, and you can rent out your property to earn rent and pay your mortgage back. Investment properties are commercial assets and can help you generate passive income.

Benefits Of Buying Investment Property Over First Home

Though buying your first home fulfills the classic Australian dream, investing in a property instead can still be the best option if a strategic plan is followed. There are benefits to investing in property. For example, you can get tax benefits due to depreciation and negative gearing. You can make more profit with positive gearing.

What Is Depreciation And Gearing?

Depreciation refers to the natural wear and tear of the property over time. It may sound negative, but it actually helps you to deduct taxes over time. Whenever you spend money to service property, like repairing or buying new assets, a small part of that cost gets reduced from your tax money every year, thus tax deduction.

Another way an investment property can help you make a profit is by negative or positive gearing. Negative gearing simply means a small loss that you bear from investing in your property.

The returns you get from rental returns are less than the mortgage value you pay, but this small difference hardly affects you. Positive gearing is completely a favoring factor. When the rental returns are higher than the mortgage value you pay, of course, you make a profit.

Depreciation and gearing aspects need expertise in the market. Before investing in any property, advice from experts like Quarter Acre can help you make well-informed decisions.

Conclusion

Buying your first home or investing in your first property is a huge step. Whether you buy your home or make an investment, it is necessary to have considerable knowledge about the market.