According to research1 from the final quarter of last year, renters were reported to have the greatest decline in
Home owners were reported to have the greatest savings of all time. Home owners had:
• Better levels of savings
• Higher debt clearing rates
• Increased wealth from strong growth
In house prices, and
• A staggering 46.5% of home owners were debt free!
That’s the highest since September 2008. So when is it better to rent than to be a home owner? Well it can be:
1. When you are also a landlord!
Yes, sometimes renting while investing is a much better ﬁnancial arrangement than owning your own home. Now don’t rush oﬀ and start leasing your house by any means – there are many diﬀerent reasons why you might AND might not use this strategy. Talk to us ﬁrst!
2. When you regularly change work locations
With the enormous selling and relocating costs, stamp duty and other expenses of selling a home every time you move, then renting while investing is usually a great option. It allows you to jump into the property market for the longer term and gives you ‘time in the market’ to gain capital and rental growth instead of losing money every time you sell.
You might also ﬁnd that you can accumulate several investment properties over a shorter timeframe that will add to your ﬁnancial stability. When the time is right for you to purchase your home, you will then have a few properties to either pay for it or help fund it.
This type of investing requires a particular type of ﬁnance structure, so please avoid going directly to your lender for this approach. Speak to us ﬁrst.
3. When you are young and single
With career changes more acceptable for younger Australians, there is no guarantee they will be in the same job, the same industry or even the same state or country in their ﬁrst 10 to 15 years of employment.
So why bother with the ins and outs of home ownership?
Take advantage of those high tax breaks and get yourself an investment property (or two) as the one constant in your life. While your career is progressing, so is your net worth and potential ﬁnancial security. YOU won’t be the one still working when you’re 70!
4. When you are old and single – you know what I mean…
Life has crept up on you pretty quickly and you think it’s too late? You would be surprised how a little creative thinking and ﬁnance structure can get you into the property market and catch up on lost time. There are many ways we help our mature clients’ transition into the property market at a later stage of life. Anyway the 60s are the new 50s and the 50s are the new 40s aren’t they?
We can look at:
• future inheritance
• parents’ equity – (yes even at this age)
• working life expectations/realities
• tapping into your superannuation
Many lenders are now looking at an aging workforce and accommodating these needs with special investment lending strategies. Lenders may however, add speciﬁc clauses relating to shorter loan terms or provision to review or repay if employment ceases. Be sure to ask us when you call.
5. If you’re recently separated
There’s nothing tougher than having to start again. Yet many of our property investors are single parents who are
working with us to determine the best way forward ﬁnancially. If your kids are getting older and going to leave home in a few years, it sometimes makes sense to rent that larger family home and purchase an apartment or townhouse now as your future home. You can rent it out in the meantime. One of the beneﬁts may be that it will also decrease your taxable income if you purchase the right property.
6. When you are approaching retirement and want to purchase your future downsized property NOW
Similar to old and single. Many of our investors are in the 55+ age group when they purchase their ﬁrst investment
property. With double the income, inheritance and super, there’s usually a lot we can do for you.
7. If you either can’t afford or can’t find your dream home
Delayed gratiﬁcation is not something our young ones are accustomed to or could even contemplate. But for switched on singles and couples, renting now, investing now and buying your dream home later can be the key to that mansion you’ve dreamed of.
How do we know this? We’ve done it for our clients…
Not many (because most don’t realise they can), but our now higher net worth clients have created their wealth through renting while young, investing early, then selling some and keeping some investment properties later. This has given them the opportunity to purchase a dream home valued at double what they could have ever imagined. Purely a dream for 92% of the population and a reality for a few.
Which one do you want to be?
- Next Generation: Young, Brave and (Financially) Free July 7, 2020
- Are You Forgetting your Child’s Future? July 7, 2020
- The Solution to the Affordability Crisis is to Change Our Attitude Towards Property July 7, 2020
- Why Keeping Australia’s Real Estate Prices Growing Could Be the Solution Rather than the Problem July 7, 2020
- Are Property Investors the Antithesis Holding First Home Buyers Back from Achieving the Australian Dream? July 7, 2020