Hi LeoT,
Thanks for sharing so much in your interview, it was great to get a few insights - I started a forum account just so I could post here. My partner and I live in Brisbane are currently saving for a place. I'd like to ask what your living arrangements were when you first started? I.e. we're currently renting and not too sure whether we should buy an IP and continue renting, buy a PPOR, or buy an IP to live in with a few tenants, with intention to buy a PPOR as our portfolio grows. How did you approach this?
Cheers,
MMack
HI MMack,
Welcome to the forum mate. The question your asking is a good one and at the end of the day it all comes down to your goals/timeframe and what your willing to accept or not. When it comes to building wealth, your borrowing power is going to be 1 of the most important factors that will determine how fast you can build your asset base. Basically, the argument for renting while you invest is simply because in a lot of cases you can rent a place that you like for much less than the mortgage repayments on the same place would be. Hence, your weekly income is affected less so there is more money to invest with and it also increases your borrowing power (because you have more income you keep).
But you also need to weigh up if you are comfortable in doing that and if its something your partner is also comfortable with. Its really a personal thing. I know many investors who bought IP 1,2,3,4,5 etc before they bought their own PPOR. I know some that bought their PPOR and rented it out while they rented themselves and kept buying IPS. You need to work out what your comfortable with and what you can accept.
One thing I can unequivocally say is if you buy a PPOR that has a huge mortgage say 1m plus, that will definitely affect you building an asset base fast (depending on income etc but for most ppl) and I would strongly not advise that.
Good on you for starting mate!
Leo