Risky but Ambitious Method of Owning 3 Houses within 10 Years

Here’s a risky but ambitious way of owning 3 houses within 10 years.

Use this method with great care.

Assuming you want to buy a house worth $400,000. Assuming further that the downpayment is 10% plus additional cost, so you cough up $50,000. Once you buy this house in a location where the property value appreciates, wait for the end of the third year. By then, the property value would have appreciated. Refinance the house and use the additional money as downpayment for your second home. Repeat this after 3 years and in 10 years, you’ll end up with 3 houses.

But dont forget the monthly installments. You must be able to afford the monthly installments. Which means unless your monthly salary can absorb the 3 monthly payments, you will need to ensure that your house have tenants and their rent pays off your monthly repayment with any extra being kept aside for property maintenance.

And remember, if you’re in Australia, the interest portion of your loan is tax deductible for investment properties only, not applicable for your dwelling residence.

Utility One for all your Utilities

If you’re new to Australia, finding a place to rent or buy can be a daunting process. My wife and I took close to a month to find a place to rent when we first arrived in Perth. And once we got our place, we then had to call all the relevant utility agencies for water, gas, and electricity, to transfer the account to our name.

What we didnt know at that time was the existance of Utility One, a free one-stop shop for setting up all your utilities. Log on to http://www.utilityone.com.au/ and click the Connect Me button.

The process flow is as shown below. None of your personal information will be misused.

Their service is free and can be helpful when you’re new to Australia.

I am sure their making a profit somewhere down the line but as for now, their not charging us, their consumers. However, if you do find anything wrong with their service, do let me know in this blog.

Buy or Rent?

Now that house prices are rock bottom, is this a good time to buy a house or should we still rent?

Buy or Rent?

Buying a house is good because rents can be channelled into monthly loan installments and at the end of the day, you own the place. And your house now becomes an asset in your portfolio.

But on the other hand, renting gives you mobility, especially when you’re either single or when your job moves you around all the time. There’s no point, unless its for investment purposes, to buy a place and then not be able to see it.

So which is better, rent or buy?

It all depends on YOU!

Never buy in a location where house prices have already peaked, like Mt. Kiara, Damansara, Tmn Tun Dr. Ismail – house prices in these places have stabilized over the years. But house prices in places like Kota Damansara, Kota Kemuning have risen 21% over the last two years. So, look for new housing development – these will be a wiser investment than well established townships.

But also be aware that having a house comes with additional financial commitment like repairs, maintenance and quit rents.

Renters, on the other hand, have some disposable income every month as rentals are usually lower than house installments. This allows the extra money to be channeled into other investments. Many couples, especially those who are still single and childless, go about it this way in letting their money grow at a faster rate in high yield investment tools. They then use the gains from these investment as their house down payment, thus lowering the overall loan amount and duration.

Ask yourself – are you read to commit a monthly payment for the next 25 years? Even if your purchase is for investment purposes, be cautious when buying because there is a glut of property out there and the place you buy may or may not flourish – you don’t want to end up holding an apartment worth only half its value 3 years down the road at Bandar Lagenda Nilai when the proposed university project by Dataran Mantin failed to take off and left all its buyers in a lurch!

Look into your future, especially time. If you’re on the move, its better to rent. Legal fees and paperwork can cost quite a bit, usually a few thousands.

But if you’re staying put, look a for a new township close to where you work – the prices will be lower, comparatively, and with room to grow.