Rising property prices in several parts of the country made it slightly impossible for many to realise their Great Australian Dream. Hence, this dream is starting to take a distinct shape for some buyers: Reinvesting.
Rather than purchasing the property they want, people keep renting in an area they like living in. Then they are buying an affordable investment property somewhere else. This is one of the best strategies to enter the soaring real estate market for many Aussies.
Reinvesting Explained
Let’s say you want to purchase a three-bedroom home in Adelaide’s inner-southern suburb, but the sale prices in this area mean the property is out of your reach. In such a scenario, you may consider reinvesting – where you rent the ideal three-bedroom home where you wish to live and then purchase a property in a more affordable suburb.
The property you purchase can be rented out to cover your rental payments and later sold for capital gain.
Pros And Cons Of Reinvesting
Pros
Climb The Property Ladder Sooner. Reinvesting allows you to enter the real estate market early with a smaller deposit, in contrast to waiting several years to afford your dream home.
Build Wealth. Reinvesting is a clever strategy to start building your investment portfolio, which can create wealth for you and your family in the future.
Flexibility. When you are renting, it is always flexible to upgrade, or downgrade based on your circumstances.
Save For Your Dream Home. Owning an investment property in Adelaide help you save for your dream home.
Tax Benefits. You can claim interest payments on your investment property mortgage as a tax deduction.
Live The Lifestyle You Want. If rental prices fit your budget, you can live in your dream house without compromising on features or location, and you do not have to worry about the long-term mortgage commitment.
Cons
You Do Not Own Your Home. No matter how much you love your rental property, you don’t own it. It can be challenging to move out once you form an emotional connection to a place, but the landlord wants you to exit.
Purchasing An Investment First. Buying an investment property before getting your own home may seem implausible for many people.
You Cannot Make It Your Own. No matter how extensively you improvise the rental property through renovation, remember that it is not yours to tinker with.
Our Two Cents
How to decide which option is right for you – unfortunately, there is no stock-standard answer to this question. Instead, the best approach depends on your circumstances. Let us help you identify top investment strategies that suit your situation.
