The dream of owning a family home is something that has been deeply embedded into our culture in Australia for many generations. As you can see from the graph below, owning a home today requires a substantially higher financial commitment than what has been required from previous generations.
These days most first time home buyers can’t afford to buy where they actually want to live or if they can, they need to take out an enormous loan which maxes out their borrowing capacity. They risk becoming a slave to their mortgage which impedes their ability to get ahead financially.
I know this all to well as I purchased my first home before I purchased an investment property.
Due to the large mortgage, I spent many years trying to get the mortgage low enough to put me in a position to buy an investment property.
Had I purchased an investment property first (where I could have received rental income while also renting myself in an area I wanted to live in), my borrowing capacity would have enabled me to buy many more properties sooner.
I have calculated that I would have made close to $1 million in equity by the time I reached thirty had I bought the investment property first.
There is definitely a case for both buying a home first or buying an investment first, it all comes down to your personal goals.
My team has put together the following guide outlining the advantages of both strategies – the decision is yours.
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