Why million-dollar mortgages are a turn-off

July 3, 2017


By Nicola McDougall

Why million-dollar mortgages are a turn-off
Posted on Monday, July 3rd, 2017

It was almost like he’d stepped into an alien property world when David Tomlins returned to Sydney last year after living overseas.

He admits he hadn’t followed the Sydney market during his five years away, so when he started attending a few auctions he couldn’t quite believe what he was seeing.

A comparable property to his rented terrace in Glebe was going for $1.4 million to $1.5 million, he says – and that was last year.

“We were looking at Sydney prices and realistically I couldn’t see myself living in Sydney for the next 30 years to justify purchasing a property,” he says.

“It was more than a surprise. It was just something I couldn’t comprehend, how it could possibly be at the level that it was.

“It’s just not something I would be willing to sign up to because it’s such a massive commitment.”

Within a few months, David had decided he had no desire to take on a million-dollar mortgage while he was in his mid-30s so he reinstated a strategy he’d used previously.

Lifestyle matters

A number of years before, David had invested in property in his home state of Queensland, but even back then he wasn’t keen on buying a home to live in.

Instead, he opted for investment property so he would have the freedom to live wherever he wanted to in the years ahead.

While he ultimately divested that property during his time overseas, rentvesting was quickly back on the agenda.

David contacted buyers agency Propertyology and was soon in discussions to purchase an investment property elsewhere in Australia, while he remained living in Sydney.

“I have a fairly strong interest in buyers’ agents and understand how they work,” he says.

“The Propertyology model really suited my needs and what I was looking for in terms of I wanted to definitely explore more regional areas.”

With a budget around $400,000, David settled on a property in a major regional centre this year and has a plan to buy another one over the next six to 12 months.

Investing strategically

David, who is a corporate strategy management consultant in the agriculture tech space, has adopted a diversified investment strategy in which he also invests in shares.

Today he is 35 and hopes to leave the workforce sooner rather than later – but he says if he’d bought just one property in Sydney that would likely never have happened.

“If you take it to right to a higher level, I’ve got aspirations to leave the workforce earlier than on than needed,” he says.

“If I was to purchase in Sydney, that would never be a possibility. I’d be a hermit at home.”

He intends to keep rentvesting for the next 10 to 15 years until he can move to his ideal location of a coastal town where he can also work remotely part-time.

Until that time, he is more than happy to keep renting close to where he works so he can walk to the office as well as make the most of the suburb’s inner-city location.

“If you want to maintain a lifestyle where do you have the freedom to travel, move about, and participate in social events, the numbers really do stack up quite quickly to consider the rentvesting perspective and to look at other locations to park your money,” he says.

“It’s a numbers game. If you’re in the Sydney market and you actually had enough for a deposit for a house… you’re obviously sitting on a cash bucket of $200,000 to $250,000.

“But with $200,000 you could quite easily purchase two properties (elsewhere) and the yields would probably cover the current interest rates.”


Want to learn more about Rentvesting?
Do you need help finding the right loan for your investment?