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In This Video:

00:22 Do I Rent A Property or Do I Buy a Property?
02:13 Advantages of renting

Okay guys, Nic Griffith here, again. Glad to be back. If you’re after any property investment advice, property investment strategies, or looking for a property investment mentor, then again you’ve clicked on the right place. One of the things that I often get asked from my clients, and it’s a common misconception involving both these things is, “What do I do? Do I rent or do I buy?” It’s a fascinating conversation and a really interesting topic to talk about. I love giving my opinion on this one, because it often opens people’s minds up to a new way of looking at it. There’s a lot of old opinions going around about this.

The first one is “rent money is dead money.” I think we’ve all heard that one. The people only rent because they cant afford to buy. I blow those theories completely out the water. Rent money isn’t dead money. What do you think interest is on your loan when you pay mortgage off? Only people who rent can’t afford to buy. What if I told you that I’m a renter and I’ll always be a renter until such day as my wife says, “Nic we are buying our own home.” I think a lot of property investors have the same mindset. and there’s a whole bunch of reasons why. I’ll run you through those right now. There’s a main difference to consider as well between buying your own home and buying an investment property.

Two completely different purchases. Buying your own home is a purely emotional decision, not a financial decision. It’s based around what you want, where you want to live, what design you like, what your kids want, what your partner wants.

It’s a very emotional decision, not based around numbers and necessarily growth, whereas buying investment property is all about the numbers. I don’t care what it looks like. As long as the numbers stack up, it’s going to get me growth and achieve what I want to achieve.

The old saying “homeowners buy with their hearts,” probably “investors buy with their calculators” rings true.

For me, as a property investor, it’s all about these decisions, and I’ll always rent and buy investment properties along the way. There’s a couple of reasons why I do this. The first one is flexibility. Renting provides me the flexibility to live where I want to live, to move when I want to move. A second one to that is, it allows me to rent in potentially more expensive properties than I would be able to afford to buy. That’s right. The reason for that is, because high-end properties have really low yields, because the people that buy high-end properties as investments aren’t concerned about the yields, therefore the rents on a high-end property is quite low.

I can afford to rent somewhere really nice that I wouldn’t necessarily be able to afford to live in. The third reason is cash flow. By renting, it really frees up my cash flow. I’m not paying off a principal component of a mortgage, I’ve now got a heap of tax deductions on my investment properties I can claim, and my cash flow is significantly increased. That then leaks into my serviceability with the banks. The banks then view me as a lot more able to service debts, so they’re more likely to lend me more money so I can then go and buy more property. In short, renting allows me to have a greater cashflow, live wherever I want to live, and buy more investment properties.

That’s where you create your growth and your wealth. Through acquiring a portfolio that grows in value to give you the growth you want. It’s an interesting way of looking at it, isn’t it. An interesting way of looking a it. Think about some of those things I said, and if you’re interested in finding out more, we run our free training days all over the country. You can jump on our website www.ipedu.com.au, click on the training tab and it’ll give you all the locations of where we’re running our complimentary training days.

Myself, or one of my team, would love to see you there. Cheers.

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