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Rent or Buy – What’s Best for You?
Should you buy your own home, buy an investment property or rent? The answer is different for everyone and will depend on factors such as your personal goals, life stage, financial situation, income level, employment prospects and the real estate market in your chosen location.
Owning, investing and renting all have their pros and cons. Consider the following tips to ensure your financial success – whichever option you choose:
Success as a property owner/occupier
- Go for the “dream home” – the best property for YOU will offer lifestyle opportunities, a convenient location and long-term growth potential.
- Tap into incentives – take advantage of cash grants, stamp duty waivers and other first home buyer incentives.
- Get the right finance – a mortgage broker or financial advisor can help secure the interest rate and repayment terms that are best for your situation. Having a properly structured home loan with features specifically tailored your needs can cut many years off your loan term and save you thousands of dollars in mortgage repayments.
- Rapid Repayment – Consider renting out a room to help eliminate your mortgage even faster. This is a great way to build up your “Cash Equity” position that can help you pay for that overseas holiday, buy that new car or begin your journey as a property investor.
Success as a property investor
- Go for growth – a successful investment property will increase in value, achieve a high rental yield and grow your net wealth. Be sure to research location, growth potential, vacancy rates, the rental market and future developments before you start your investment property search.
- Cover all costs – it’s a wise idea to have a buffer – your “sleep at night” comfort that can be used to cover maintenance and repairs, periods of vacancy and other unforseen circumstances.
- Be rational – a property investment is a business, so treat it like one. Don’t be emotional about financial, aesthetic or tenant-related decisions.
- Protect yourself – be adequately insured. Landlord insurance will cover you against theft, accidental or malicious damage and unexpected vacancies. Building insurance is also a must to cover your property (and any contents) against fire, weather events, break-ins and third-party liability.
Success as a renter
- Live where you love – flexibility is one of the best things about renting. When property prices are out of control, renting can often let you live where you love for much less outlay than buying in your chosen area.
- Lock in lease terms – when negotiating a lease, aim to fix your rental rate for as long as possible. Stable expenses allow for better financial planning.
- Invest! – funds not spent on a deposit, mortgage interest, rates etc. can be funnelled into a diverse range of investments such as shares, bonds or managed funds. Don’t waste the opportunity to build wealth while renting.
If you need help with any of the above, or if you’re ready to move to the next step – give us a call on 02 8004 2222 and let us show you HOW!