* Why would I keep renting yet buy an Investment Property?

* Should I wait and save up to buy a property ?

* Is now a good time to get into the property market ?

* Should I buy a house to live in or an investment ?

Why would I keep renting yet buy an Investment Property?

Consider the following; You presently live in a house that is worth $300,000 and you pay $320 per week rent. If you were to buy this house, your repayments for the home loan would be around $450 to $500/week.

On top of now having an increased weekly repayment, you will use additional spare funds for Rates, Taxes, Insurance, Maintenance and to beautify your property, maintain the grounds, improve landscaping plus a multitude of other things that a home owner spends money on.

YES, it is great to say this is my house! But at what financial cost and how will the additional financial outlay effect your everyday standard of living?

On the other hand, if you were to buy an investment property, you have entered the property market and you now have a tenant and potentially your taxes to assist in paying for that property.

In order to get a home loan, you need to be working so you can show the lender that you have an income to service your debt. If you have an income, then you must be paying taxes???

The advantage of buying an investment property is this now becomes a business for you. As a business, certain expenses related to operating this business become tax deductible. Things like Interest on your loan, Rates, Taxes, Insurance, Maintenance plus certain other claims now become possible. Secondly, if you were to buy a new investment property, the government allows an annual depreciation allowance that is also claimed against taxes you are presently paying on your wages/income.

Various properties have different allowable depreciation schedules but for the purpose of this example, based on purchasing a brand new $300,000 property, I have estimated annual claims to the value of $26,000. This means that if you earn $65,000 per annum presently, you would be paying around $17,900 in PAYG tax. However, by now having this investment property, the annual claim of $26,000 is deducted from your $65,000 wage which means your annual income is only taxed at $39,000. Hence, instead of paying $17,900 a year in tax, you only pay $7,990.

Basically if set up correctly you will receive $191.00 rebate from the Tax Man each week. You have now purchased real estate whereby the tenant pays $320 per week rent and the tax rebates contribute $190 per week which means the actual cost to you for buying and servicing this property is only $55.00 per week.

You are now a proud property owner.

There have been a number of instances were applicants on higher incomes have not had to make any personal contribution due to the depreciation and tax rebates being significantly more beneficial.

Should I wait and save up to buy a property ?

Having funds to put towards your property purchase undoubtedly enables you to obtain loan funds at a lower interest rate.

However, consider the savings in interest rates compared to the increase in property values. The difference in interest rates could be as much as 1% per annum which means on a $300,000 property you could be paying an additional $3,000 per annum in interest.

If, however, you look at some properties which have increased in price by 15% or greater per annum, this means that a property that is valued $300,000 today could be worth $350,000 or more in 1 years time.

By waiting and saving for 1 year, you may save $3,000 in interest but the house you could have purchased 1 year earlier is now $50,000 more expensive.

The maths speak for themselves.

You decide if it is worth waiting?

Is now a good time to get into the property market ?

It saddens me to come across so many people that have delayed entering the property market.

Look back 20, 10, 5, 2 years at the price of property in most growth areas of Australia. If you have been renting for 10 years now, don't you constantly kick yourself saying I wish I had bought 10 years ago.

Back then I could buy a house for $75,000 and now the same house costs $450,000.

There is constant media news and publication comments made by the so called boffins making statements like; "The property boom is over" or "Housing prices crash" or "The economy is in a slump" or "Now is not a good time to buy".

If I may be so bold and blunt to say, "BLOODY RUBBISH".

As long as we have had finance and economy experts, markets have crashed, economies have gone into recession and the building industries have crumbled, yet show me any house today that is worth less than it was 10 years ago?????????

All of these negative statements make losses and crashes self fulfilling prophesies, yet the ones that always suffer are the average hard working Aussie battler that is so influenced by this negativity that they feel safer doing nothing.

This unfortunately leads to scenario where so many say,

" I wish I had bought last year or 5 or 10 years ago.

YES, now is a brilliant time to buy because tomorrow it will cost more.

Do not always enter the property market thinking you can instantly make millions of dollars. Sometimes you may have to hold onto your property for a few years to realise any form of growth or profit. There are numerous suburbs in various states of Australia that have yielded incredible capital growth during our worst property or stock market slumps.

Do not always look at the suburb you live in and do not judge the property market by that limited area. Maybe your suburb is presently in a property slump but there are property markets all around Australia that provide exceptional investment growth opportunities.

Simply talking to your local real estate agent will not necessarily give you knowledge or insight into the Australian Property Market. The majority of local Real Estate Agents only sell properties in their restricted geographic area and can only give you growth and past history trends of that area.

When searching for a property, you want to know that there is the potential for good capital growth because this is the major contributing factor of how equity value is increased in your property. Increased equity is also used as leverage in order to purchase multiple properties.

Speak to a property investment professional.

Don't you think you should buy now?

Should I buy a house to live in or an investment ?

Mostly this is your own personal choice.

Buying a home to live in is personal.
Buying an investment property is business.

Purchasing your own property to live in has tremendous benefits such as not being answerable to a Landlord. Being able to personalise your living surroundings, making your house a home certainly provides the feeling of achievement and contentment.

Owning 1 or multiple Investment Properties allows you to experience the financial benefits and future security of wealth creation. Purchasing investment properties is made more attainable by the fact that you can use your taxes to help secure a potentially brighter future for you and your family.

In both instances, you can say

"That is mine!"

You now own property (in conjunction with your bank or lender) but unless you default on your loan, your property can not be taken away from you.

Most importantly, get into the property market and get into it NOW!

Tomorrow it may be too expensive for you to afford.

How many parents over the years have said;

"Bricks and mortar my child, bricks and mortar!"