Why We Are Buying Investment Properties Before Our Own Homes

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Both me and Simon are planning on buying an investment property before we buy our own home. In this episode we talk about why seems like the right decision for us.

Resources Related To This Episode

Buying Our First Property: Our Current Plans

Transcription:

Hey guys, Ryan here from on property and today I’m joined with Simon from pumped on property. How’s it going? Hey guys. Yeah, really good. Thank you. And we just recorded a video talking about our journeys and where we’re at in buying property. And something that really interesting that came up was this fact that we’re both looking at buying investment properties before we purchase our own homes. And so in this video we wanted to talk a little bit more detail about why that is. So why are we looking at investment properties versus our own home and you know, obviously everyone is going to be different, everyone’s going to be unique, but this is our story and why we’re choosing to do this. So

yeah, so it’d be great because we got such different lifestyles at the moment. You’ve got a few businesses that you’re running a family children, I’m a single person with no relationship, no real expenses at this point in time. So it’d be fun to kind of talk about that contrasting ideas and why we’re actually doing that.

Yeah, and so we’re both in very different situations, but we’re both choosing to invest in investment properties before we buy our own home. So do you want to kick us off as to why you’re thinking about doing an investment property before purchasing your own home as a young single

person would not that many expenses? Yeah, definitely. The main reason that I want to invest first is because I’m not too sure where my life is going to take me over the next few years with regards to relationships and finding a partner, having kids and I’m sure that when I do she’s going to have a pretty big, uh, what we’re going to want to have a pretty big impact is to where we are going to be living the schools that we want to be sending our kids to when I’m having that flexibility to make that decision at a later point in life is really important. But also I want to set myself up for the future right now so that I can have that flexibility and make those choices about where I want to live in the future as opposed to just buying a property where I want to leave now because those things could change at any minute.

Yeah. Because what, you just moved up to the sunshine coast 18 months ago or something. Yeah. So this is the situation that me and Kelly had as well, is that we looked at buying our own house first on a couple of occasions. One was when we lived on the central coast, just north of Sydney. We were ready to buy a house there, one commission away from the deposit ready to go ahead and buy a place and then another time on the gold coast. But both those times we didn’t feel quite settled in the area and we didn’t want to buy a house and commit to living in that area full time if we weren’t sure that that’s where we’re going to be. And so for me and for my family, the reason that we’re investing before we buy our own house is actually really similar to you and it just comes down to having those choices in your life and having the choice to live where you want to live.

And for me, I value financial freedom more than the security of having my own home. And when I look at the two different options, I can see that sure, if you have your own home, sure if you’ve paid that off, you’ve got that security that you can live there and no one’s going to kick you out, etc. But you also don’t have passive income from the property portfolio to support you. So you still need to go there. You still need to work. And I’m in the fortunate situation where my Businesses are pretty passive and so I kind of had financial freedom through my businesses anyway. But I would like the security of knowing that even if my businesses eventually failed or didn’t make as much money, that I’ve got a passive income stream that is more secure, that is properties that I’ve completely paid off. And then again, that security for my kids as well. And so when I look at what is real security is real security, owning your own home so that you can’t get kicked out of it because if you’re renting, obviously you can get kicked out or his real security. Having that passive income. So if you are renting and get kicked out of your home, then we can just go and rent somewhere else.

Exactly. It doesn’t matter. You have, you have freedom, you have financial freedom. That’s why we call it what it is because you have the choices to move on. If you lose your job, if you want to pursue a different career in a different area. If you want to go traveling, if whatever I kid ends up being a professional tennis player and you need to move to the us, like whatever. You just need to have the freedom of choice. And that’s why I want to invest initially. And also, I think my idea of my dream home right now as a 25 year old single person is very different to what it’s going to be in five or 10 years time when I’ve got a family and I’m a partner. So why, why would I go ahead and spend 500, $600,000 on a property that I see as my dream home today that in 10 years time it might not look like that anymore.

Yeah. And then the person that you made is like, simon, I hate this house. I don’t want to live here anymore. Can we move Somewhere else? And I think um, for me as well we talked about in the previous video, but I want to be a more passive investor so I want to invest in properties that we’re going to build the granny flats on them and then they’re going to be positive cashflow and pay for themselves and kind of just take care of themselves and like I want to do that. And then just be able to focus on business and focus on life and basically purchase those first and accumulate those first. So that I know I’ve got the passive income coming in and then I’ll look at buying my own home as well because obviously if you purchase your own home and then if you can work and pay that off, then your expenses dropped significantly because you’re not paying rent anymore, you’re not paying a mortgage anymore. So I’ve seen massive benefit in owning Your own home. But for me, I want to secure those investment properties first and then I want to go ahead and buy my own home.

Exactly. And I’m on the exact same path at this point in my life and yeah, it’ll be. It’ll be exciting. And securing financial freedom seems like a really, really good thing to do. Things like the smart thing to do.

But then the downside of ask not buying your own place is that kelly is. My wife is An interior desIgner and she has a real eye for doing renovations and stuff like that and she loves doing that sort of thing. But we also have three kids and she works in the business as well. So she’s pretty busy. So when you own your own home, then you have the opportunity to do renovations slowly and to just paint the house when you’ve got spare time and all of that sort of stuff. Whereas if you buy an investment property that you want to rent out, you kind of got to do all the renovations at once, which is going to be a big push a which we may not want to do. And so that’s kind of would be the positive or buying our own house versus that ability to renovate it slowly and then get some equity out of doing that.

Um, but other than that, I can’t say the major benefit for us in doing that before doing the investment properties well, I think the decision is going to be really personal for each person out there. So for us, obviously we value that financial freedom and we value those choices and we can see the path to purchase these investment properties, but then also eventually purchase our own home. so it’s not an if or for us, it’s not choosing one or the other. We are still choosing both. We do still want to buy our own home, but we just, I think neither of us are at the place in our lives yet that where we know exactly where we want to be in what house we want to be at and even though I’m married with three children and I love where I live, I don’t 100 percent know that that’s where I want to do for the next fIve, 10 years.

And so I feel like we’re actually at the same point in that aspect in that we don’t know where we want to settle and we don’t know what our dream home looks like. And so it’s also kind of not worth it from that aspect. Yeah, exactly. And another point that I wanted to touch on, which is really important when it comes to buying your first or your family home first, is if it’s not the right time in the property cycle, you could be purchasing at the very peak of the market, which might not be the best strategic ideas for you and your family because it might put that financial freedom on how it. But 10, 15 years and you might lose out on a significant amount of money as well. So it’s really important to keep your finger on the pulse as to where everywhere, wherever it is, sitting on that property cycle.

Yeah, because that’s the thing. Different cities or different areas or different points of the property cycle, so sydney may have paid at the time that we’re recording this. Whereas brisbane is kind of picking up at the moment, so when you’re investing, you can take advantage of that property cycle and where each city is at. Whereas if you’re buying your own home and you want to live in a particular area in a particular city, then you can’t really take advantage of that and the same on a suburb by suburb basis. So if we want to invest in Brisbane or in southeast queensland and we can. As Investors, we can look at every suburb and choose the one that we think’s gonna. Get the most growth in the future, which is going to set us up the best financially to eventually purchase our own home and being a good position.

Whereas if you’re purchasing your own home, you kind of don’t have that choice because it’s more personal in is where you want to live and then also if you do that first, I’ve seen so many people just over leverage and just overcommit to their own home to the point where they can’t afford to pay for it because things change in their life. They have a kid and they dropped down to one wage or someone loses their job or whatever happened. Like I’ve seen so many people in so many different phases of life have financial difficulties and can’t afford their own home anymore. Whereas I feel like if we purchased our investment properties first and they’re positive cashflow and then we purchase our own home. If even it gets to the point where we can’t afford our home anymore, we could sell that, go back to renting and we still got those foundational properties that are paying themselves off and we’ll deliver financial freedom in the future.

So it’s like kind of like a step back. But then we’re still working towards. We’re still got those foundational properties that will achieve financial freedom for us. Which is the most important thing. yeah, thinking added on the head there, ryan, being able to invest first can can provide financial freedom for you and give you the freedom of choice and we’re not saying that you guys should do this or do the same thing as us. I just thought it was really interesting that as simon said at the beginning, being in such different situations in the fact that I’m married with three children, simon single, with no children that he knows about.

We’re in such different situations but that we are still looking to invest before we buy is really interesting and we wanted to share our thoughts around that. So we hope that this has stimulated your mind today that this has given you some ideas and that this will help you make the decision for yourself, which is obviously a very personal decision, but make that decision for yourself as to whether you want to buy your own home first and aim for that. Or if you want to build up those foundational properties first, aim for that and get your base line financial freedom set up before you go and stretch into your own home. So really it’s up to you, but we hope that our sharing our story and our opinions and why we’re doing what we’re doing can help you out there on your journey. So really hope that helps. And if you haven’t checked it out already, go ahead and check out the video. me and simon did talking about our property journeys and where we’re at at the moment. Also, don’t forget to subscribe to the channel as we got new episodes coming out almost daily. And until next time guys stay positive.

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