I’m sure, you’ve heard of the saying to rent where you want to live and invest where it will make you money.
The basic investor’s mantra.
But still so many are confused as to why you would do this and the honest answer is that the numbers don’t lie, so let’s look into an example as to why this works.
Let’s say you’re an investor and you want to build a massive portfolio that’s in alignment with your goals and will help you achieve these goals in 10 years. So you’re committing to a 10-year plan. Great.
You have your investment strategy working for you, investing in properties that will grow over time. A mix of Capital Growth and Rental Yield properties, but you need a place to rent. So where do you go?
You live where you want.
Bondi, Bronte, the CBD, wherever it may be. And you can afford it because your investments are taking care of themselves, generating an income for you as well as equity, and when you break down the numbers on homes in these areas, you’ll notice that their rental yield is significantly lower, meaning that unless they own the home outright, the homeowners are most likely having to pay an amount towards their mortgage on top of your rental payments to them.
For example, we have a client who has multiple properties all over the country and rents a $1.4million dollar home for only $850 per week. That’s a rental yield of only 0.03%. not a smart investment but a huge win for the renter.
So let me ask you this, why would you want to commit 40+ years of your life to a single mortgage, for a home in an area you don’t really like but it’s within your budget when you can invest in properties that will grow for you and help you buy that dream house in 10 years, whilst living your best life by the beach in one of Sydney’s most in-demand suburbs?
Seems like an easy answer for me, as to where I would rather be.