The great Australian dream is to purchase your own home and live in it. But has this dream changed? Can we build wealth and live the lifestyle we want? Here we look at how you can have both by looking at Scott and Juliette’s story
A little bit about Scott and Juliette
Scott and Juliette are clients of ours, they are aged 45 and 37 and both earn $100,000 a year and love their lifestyle in North Sydney. They are close to work and meet up with their friends in any one of the great cafes and restaurants in and around North Sydney. They are paying $2,700 per month in rent which leaves them with plenty of cash to enjoy their life.
Looking at buying in the same area
Like most of us Scott and Juliette reached a stage where they wanted to build wealth so they started to look at properties and soon realised they would be paying close to $950,000 for the place they wanted. The bank was happy to lend them $855,000 with repayments of $4,910 each month, plus the expenses to maintain their property which are about $435 each month. They would need to come up with $5,345 each month which is an incredible $2,645 more than they are paying in rent.
Looking at buying in another area
Their next option was to look at buying in an area where their mortgage was going to be similar to their current rent. They did find a number of properties around the $550,000 mark that had repayments that almost matched their rent. The downside was that they were now further away from work and their friends and the lifestyle they loved.
Build a portfolio of investment properties
This is the strategy Scott and Juliette decided to take. The first property was a house and land package for $485,000 with a 10% deposit. After tax deductions the property would be positively geared making them an after tax income of $36 each week.
The second property was a one bedroom apartment in a metropolitan city, with great demographics. The purchase price was $400,000 and after tax deductions the property would cost them an estimated $59 each week.
This strategy has allowed Scott and Juliette to live in the area they love. Have two investment properties valued at $885,000 and after tax deductions these two properties will cost them $23 each week.
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