Gaston Bachelard once said, “If I were asked to name the chief benefit of the house, I should say: the house shelters day-dreaming, the house protects the dreamer, the house allows one to dream in peace.” The dream of having a house of your own may have changed a little bit in modern times as first home buyers now see it as an investment property.
Most people like to stay close to their workplace which is also why the city centers are the most crowded areas, but the prices in these areas are also exceptionally high that makes it difficult for many first home buyers to buy a house. Furthermore, today’s generation likes to rent an apartment in desirable locations and buy properties they don’t want to live in. Hence, it is good to treat your first home as an investment property.
Rent-vesting is a term to suit the lifestyle of the millennials, it is a way to allow them to travel wherever they want to and at the same time will enable them to grow their wealth. In short, it gives them the flexibility to try and do different things differently.
This trend is so prevalent, but statistics don’t approve of this trend as it understates the real buying activity.
Anyway, buying an investment property first may help you achieve your ultimate goal of owning your dream home in several ways:
- MORTGAGE IS PAID BY SOMEONE ELSE
Some homes are expensive, you cant always end up buying them. It is during situations like these you can think of renting the place out initially as the tenant helps pay off your mortgage until your financial conditions improve. Furthermore, it enables you to find various tax benefits such as depreciation and negative gearing which further helps you manage your finances.
Renting your property ensures positive cash flow at regular intervals, and you will have a savings reservoir. This rent plus saving will pay your loan way quicker than if you moved in straight away.
Just consult a property manager to get proper tax advice on your investment property. Investment property could attract capital gains tax in the future, even if it becomes your primary residence.
- THE BENEFITS OF CAPITAL GROWTH
If asked to choose between capital flow and capital growth, a wise man will always choose capital growth as benefits of real estate bear fruits in the long-term. Capital growth equips you in such an manner that you can refinance more properties. You should buy properties that have high capital growth potential, such features can be found in the suburbs. Always remember that properties near city centers exhibit high capital growth. If your investment performs well, it could help reduce the amount you ultimately need to borrow to buy your new home.