Entering the Property Market
Home ownership is highly regarded in Australia. The decision to rent or buy a property for occupancy is difficult. The dream of a quarter of an acre with a single dwelling is fast becoming an unachievable asipiration. Most young people are faced with an uphill battle to save a sufficient deposit without the assistance and financial backing of their family. Housing prices have continued to rise despite all the predictions of a property market bubble burst. Renting as a long term solution is becoming a more palatable option, although home ownership is still high regarded.
Options
Medical professionals have the option of renting or buying. This is a decision that need not be made for financial reasons. Doctors generally have higher incomes leaving sufficient cash flow to save a deposit.The benefits of accessing high LVR loans without mortgage insurance allows us to enter the market sooner. We are considered to be low to our low risk of default and a good future customer.
Home ownership in Europe is around 30%. The majority of accomodation is long-term rentals of five to ten years. The Australian market is not yet offering long-term rentals in residential properties. This could be taken into consideration when you are looking at renting for yourself, or renting to a tenant. A sure longterm tenant is more likely to invest time in gardening and caring for the property and increases the overall property appeal and value to investors.
Medical students frequently rent or board. There is no reason to change this circumstance immediately after graduation if it is financially viable option. The convenience of a location close to employment and shared cost of living can outweigh an immediate purchase. Needing to acquire furniture and goods are all very valid reasons to remain renting for 12-18 months while you save some money. You may choose to buy an investment property and continue to rent for a few more years before being an owner-occupier.
As a newly graduated doctor you have already made your greatest investment. Your financial future secure with opportunites due to the income earning potential of a medical practitioner. It is essential to establish a sound portfolio before those paychecks start slipping through your fingers. The temptation of driving a new Mercedes as an RMO can easily outweigh the sensible investment route.
Advantages of Renting
There are many advantages of renting:
• Flexibility of relocating as your needs change
• Reduced monthly expenditure and freeing up income for investments
• No maintenance, rates or building insurance
• Being able to to live in a property that you could not otherwise afford
Disadvantages of Renting
• Rental inspections and loss of privacy
• Permission from owner via lease for pets, wall-hangings, long-term visitors
• No financial return on your rental money
• Possibility of being asked to vacate at the end of lease period
Summary
Understanding the possibilities of the benefits of short or long term rentals allows you to make an educated decision about property investment. Consideration for your personal circumstances and long term goals need to be discussed with a qualified financial planner and property investor.
