Buying Your First Home vs. Buying An Investment Property

If you are thinking about your financial future and you are committed to investing in property, then almost certainly renting is the best option. The key is to invest in property that will perform and is in accordance with your financial profile.

Below is an example that demonstrates that it is worth considering investor ownership over the traditional ownership option.

Annual cost to buy and occupy a house valued at $365,000

	Per Month	Per Annum
Mortgage Interest	-$1,667.14	-$20,005.65
Capital Repayment	-$321.45	-$3,875.35
Council Rates	-$166.67	-$2,000.00
Insurance	-$83.33	-$1,000.00
Total 'Out of Pocket' Expenses	-$2,238.58	-$26,863.00 or -$516.60 P/W

Annual cost to buy a $365,000 investment property and rent elsewhere

	Per Month	Per Annum
Property Expenses (Including Interest)	-$2,069.75	-$24,837.00
Rental Income ($360 per week)	$1,560.00	$18,720.00
Plus Tax Savings	$638.42	$7,661.00
Plus Rent Expense elsewhere ($360 per Week)	-$1,560.00	-$18,720.00
Total 'Out of Pocket' Expenses	-$1,431.33	-$17,176.00 or -$330.31 P/W

This example assumes that you are currently on a 30 cent marginal tax rate and an interest rate of 6.09 % per annum. Our calculations do not take into consideration any inflationary measures, Capital Gains Tax or the financial circumstances of an individual.