There is quite a bit of debate around whether first time property purchasers should buy for investment or a home they will live in. I have a few definite opinions on this – which I’ll go into here, but I’m very keen to hear the opinions of others on the topic. Basically, I feel that first time buyers of real estate are much better off buying an investment property, rather than going down the road of being an owner-occupier.
This is for one very good reason – it is very rare for your emotional needs in terms of housing to combine with a good investment opportunity. What I am saying is that it’s rare for your heart to lead you to making a profitable decision. Sure, there are exceptions to every rule, this one included, but long time investors and real estate professionals will agree on this.
The main reason for this is that your own circumstances will change around every 3-5 years. This means that you want different things from the place where you live. For example, it will seem unimaginable to a 25 year old that they should be looking to buy real estate in the suburbs close to schools rather than an inner city studio to live in.
Get the picture? You’re much better off making a real estate purchase decision based on good financial sense – which equates to buying an investment property – and renting the type of home you want to live in now. This gives you a whole lot more flexibility in your life decisions, and allows you to move as you want to – without having to worry about selling the property you are living in.
Just remember though that you are not a property investor just because you rent out a property that you own. A real property investor has a solid business plan – and makes well thought out investment decisions based on consultations with a solid team of professionals. Also remember that investing in real estate is not a short term deal – it takes a good while to make property investments come to full fruition – but when they do, it’s well worth it (providing it’s done right).
So if you are in the position where you are shopping around for your first property purchase, or know someone who is, then stop what you are doing and think. Make your first property purchase a well-considered investment decision designed to make you money, and find a nice place to rent in an area you want to live in.