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  1. #1

    Default Where would you rather be - two life choice to choose from

    Would you rather have a mortgage free dream family home in 10 years

    or

    3 to 5 investment properties yielding 6% + a dream home both on mortgage but on route to being paid off 15-20 years? In theory in 20 years we could have decent cash flow coming in. But apparently this option is being very hard/impossible by Govt+banks.

    I've been saving up all last couple of years and now have comfortable amount to put a 20% deposit on a decent house in Chch. My monthly income after tax+student loan+kiwisaver is around $3800. Plus I will have $1600 from my wife who is a student but works part time. (Her income will surpass mine once she is finished studying.)

    We are having a hard time deciding which path we want to take. She is 25 and I'm 29 years old. We are in Chch.

  2. #2

    Default

    I'm sure people here will tell you option 2. ie buy an investment property and get someone to help pay your mortgage. You are still young(ish) compared to most of the people here and you need to make time to be your friend in a way of investment.

    It's a rough work at the start but both of you need to work hard and committed to achieve the goal.

    Worse case scenario, if things didn't work out, you can go back to your option 1 by selling your investment property and repay some of the loan you took for buying your dream home. Doing this you will better off because tenants will pay portions of your loan while also hoping for capital gain from your investment property.

    There's my 2c

  3. #3
    Join Date
    Dec 2013
    Posts
    102

    Default

    I started investing in property youngish - I bought my first rental in 2001 when I was 23. I didn't buy a home for myself until 2015, and due to already owning several rentals with great equity, I was able to buy my own home with no cash deposit. I have since sold one of my rental properties which was starting to perform poorly but had appreciated considerably since purchasing it in 2003. The proceeds of that sale were funnelled directly onto my home loan which is now almost 1/2 paid off.

    It's worth noting that before buying my own house, I lived cheaply in shared rentals (ie with flatmates) and also lived for a couple of years at home with family - I know this is not an option for everybody though.

    While my house is pretty nice and in a good area (Bishopdale), I wouldn't call it my dream home. But I feel like I am well on the way. Obviously my rental portfolio growth was greatly assisted by the much lower property prices in the early 2000's, and there were no minimum deposit rules back then (I was doing 5 or 10% equity 'deposits' on loans as small as $50k). If I were starting out now it would be a LOT harder.

    In your situation (with a wife) you could possibly look at a home + income option such as a duplex (or house converted to flats) where you rent one unit out and live in the other for a while as you carry out improvements and build up equity. There are a few such properties in Chch listed on Trademe at the moment. Certainly not a dream situation but a start at least.

    The other option is to buy a house to live in, but with a large enough section to build a second dwelling on later. This could be a minor dwelling (so no subdivision) or you could subdivide and build (more costly but potentially more profit).

    I am sure others on this forum have plenty of ideas also. But to answer your original question, I would go for option 2 as well...

  4. #4

    Default

    Quote Originally Posted by SimonW View Post
    There are a few such properties in Chch listed on Trademe at the moment. Certainly not a dream situation but a start at least.

    The other option is to buy a house to live in, but with a large enough section to build a second dwelling on later. This could be a minor dwelling (so no subdivision) or you could subdivide and build (more costly but potentially more profit).
    I looked at a few of these options but most times any property with potential for subdivision and/or enough area for minor dwelling, the competition is still very high and they get snapped up either straightaway. Or my offer seems to be not big enough to secure them. Last 2 offers I made were of the asking price but other people paid more and in one case some investor apparently made a cash offer which is why he managed to buy it over me!!
    Last edited by donna; 14-02-2018 at 04:20 PM.

  5. #5
    Join Date
    Sep 2011
    Location
    Dunedin
    Posts
    1,681

    Default

    option 2 would be perfect if you didnt have to have tenants

  6. #6

    Default

    Quote Originally Posted by jimO View Post
    option 2 would be perfect if you didnt have to have tenants
    Do I sense sarcasm? lol How can I have rentals without tenants ae

  7. #7
    Join Date
    Aug 2003
    Posts
    7,638

    Default

    My first property was a house and I had a flatmate who paid my mortgage so to speak. So there's that option too.

    Then I went to renting and met my husband. We rented for years and bought rentals (what we could afford). We bought a property for us - stayed there, renovated it, bought another property and moved into that and rented out the one we'd just renovated.

    I must say I wish I'd had a plan rather than just winging it. Good on you for thinking it though - you're already on the right path and you'll learn a huge amount from these forums!

    There's so many ways to invest etc the starting point is knowing that's what you want to do. Opportunities will come your way and what I've learnt is the more you know the better placed you are to grab them and make them work for you.

    cheers,

    Donna
    PropertyTalk Blog - property articles

    BusinessBlogs - the best business articles are found here



  8. #8

    Default

    Quote Originally Posted by rooney111 View Post
    Would you rather have a mortgage free dream family home in 10 years

    or

    3 to 5 investment properties yielding 6% + a dream home both on mortgage but on route to being paid off 15-20 years? In theory in 20 years we could have decent cash flow coming in. But apparently this option is being very hard/impossible by Govt+banks.

    I've been saving up all last couple of years and now have comfortable amount to put a 20% deposit on a decent house in Chch. My monthly income after tax+student loan+kiwisaver is around $3800. Plus I will have $1600 from my wife who is a student but works part time. (Her income will surpass mine once she is finished studying.)

    We are having a hard time deciding which path we want to take. She is 25 and I'm 29 years old. We are in Chch.
    Both with mortgage, you just can't live in and enjoy your rentals.

    FH
    "Remember, people will judge you by your actions,not your intentions.You may have a heart of gold -but so does a hard-boiled egg".

  9. #9
    Join Date
    May 2004
    Posts
    2,795

    Default

    Either way you have the chance to build equity which is an important factor in the medium / long term as it gives you choices.

    A rental has some expenses paid by tenants via rent, and some can be offset against other income (until the government introduces ring fencing). Owner occupied you pay expenses out of tax paid income. But you are not paying rent yourselves.

  10. #10
    Join Date
    Nov 2011
    Location
    Riwaka
    Posts
    406

    Default

    Agree with jimO
    Plan and invest wisely - You only get one life so make the most of it!


 

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