Investment Property vs Your Home: Which Should You Buy First?

[arve url="https://www.youtube.com/watch?v=aN70nowp1LU" mode="lazyload" align="center" /] Should you buy an investment property or your own home first? This is a major life decision and should NOT be taken lightly. In this episode I give some insights to hopefully make this decision easier for you. Resources Related To This Episode 2 Properties To Financial Freedom Transcription: Tonight I want to talk about the idea of whether or not you should buy an investment property or whether or not you should buy your home first and now this is not a decision that I think you should take lightly. Obviously this is a really important decision for you and for your family. This is going to be a massive purchase and a lot of people want to own their own home, so I'll just go straight out there and say that there's no right answer to this, so I'm not going to be saying what you should or shouldn't do, but I'm going to look at some of the pros and cons of each decision and then you can hopefully I'll help you make that decision for yourself because this is a big one. A lot of people want to own their own home. A lot of people also want to invest in property and achieve financial freedom, so what's going to be best for you and what are some things that you can look at? One of the things I think people don't realize when they're making this decision is that they often choosing between the idea of security and having that security because having a dream home or having a home that is your own that you pay off and own outright, that provides people with a lot of emotional security. No one's going to kick you out of that home. Banks can't foreclose on you once you own it outright. If you're renting than the people who are in the home can't kick you out. That home is yours. You've got security for yourself, but especially being. If you're like me, where you're married with kids, you've got that security that you've got a place to raise your family, that you're always gonna. Have a roof over your heads. So choosing between the security and the potential of freedom and so freedom is the ability. Well, I believe to do what you want with your time. And for me, freedom has always been way more important than security. So I'm not saying that freedom should be more important than security for you, but I will let you know that it has always been more important for security for me. And my wife had basically saved up a house deposit ourselves, but we were unhappy where we're living on the gold coast. So we were looking at purchasing property at the time. Actually we've done this twice. We saved up a deposit, we paid off debt and we were basically one commission away from having our deposit ready to buy a house on the central coast and we gave all of that up in order to move up to the gold coast. So we chose freedom in which shows that we wanted to move up to the Gold Coast to get a lifestyle and so I could start my business. And so we gave up the house deposit, use that savings for the move and to support us while we got my business up and running. So we chose freedom then and then we were on the gold coast. We were in a financial position where we could purchase a house or would be able to purchase a house in the near future, had the deposit, but we weren't happy on the Gold Coast. Um, we decided that we wanted to try something radical, something different, and so we purchased a sprinter van and then did that up and went traveling as a family in the van. So again, we put our savings into that and chose freedom over security because the security wasn't making us happy and we weren't happy in that. And so we thought, you know what, we could double down on the Gold Coast, we could purchase the house like most people do. We could choose security, but we're not happy right now. And so let's choose freedom. Let's find the place that we're happy. And then if we want to settle down then we'll do that in the future. So we made that decision, we made that gamble and that ended up bringing us up here to Noosa in Queensland. We absolutely love it here. We found a Montessori School for the kids. They love it. We feel really settled here. And so we chose freedom many times. I'm not saying that you should, but a lot of people just don't realize that often they're making that decision whether they're going to choose freedom and financial freedom or potential financial freedom if they invest well or security in owning your own home because owning your own home doesn't give you financial freedom if you own your home and let's take it to the nth degree. So let's take it 25 years down the track when we paid off all our debts and everything. If you own your own home and you pay off all your debts, then okay, you're not paying rent, you're not paying a mortgage anymore, but you still have council rates. You still have a few fees associated with that house, like maintenance, water, electricity, all that sort of stuff. So you still need to find an income in order to pay for that sort of stuff. So owning it outright will save you some money so you don't have to pay rent or pay a mortgage, but you're not financially free. You still need to find income from somewhere else. On the other hand, if you invest in property, let's say down the track, 25 years down the track, if you do something similar to what me and Ben talked about in the two properties to financial freedom, where you purchase those properties, they're positive cashflow. They're paying themselves off, you pay them off over maybe 25 years or less. Those properties are then generating you an income where you can now use that income to pay rent or to pay a mortgage or to pay for your food, to pay for your electricity, to pay for your fund, to pay for a van, whatever it may be. So investing in property can deliver you that income that can create financial freedom. Whereas investing in a house, if that's all you do, then you're not going to end up financially free. So often people don't realize that they are making decision between security and freedom, and so that's something that I just want to make you aware of. Also, I think a really good question to ask is, let's say you were financially free. Would your dream home still be your dream home? So a lot of people, how do I say this? You can do both, you can definitely do both, but what it's going to cost you is time. So if you invest in your house first, then you're investing time into that and you're gonna have more time having that house and having that security. If you invest in property first with the focus on financial freedom, let's say you invest well, um, you're not going to have that house and that security, but you're likely going to achieve financial freedom faster. And so you can then experience that freedom earlier than if you had a bought your own home. Now there's so many factors that go into this. A home can definitely help you leverage into investment properties and so it can allow you to do that. So there's so many different variances that can affect this situation. Um, but just think about that idea of time. You can do both, but what would you prefer to do and what's more important to you. And then also if you were financially free. So let's say you took the property route, you invested in investment properties with the goal of getting financially free as quickly as possible, focused on getting to that financial freedom point and then thought about your home. Let's say you achieve financial freedom. You can now live anywhere you want, not just in Australia but potentially in the world. Assuming you get the visas and all that sort of stuff. Is your dream home or what you think your dream home is now, is it still going to be your dream home? And I talked about this in a previous video. Remind dream home used to be a house in Sydney in Granola, which is a beach side suburb would probably cost around $4,000,000 or something like that. But since being financially free, being able to live anywhere, we decided to relocate. We ended up up here in Noosa and so my dream home, what it would have been maybe six or eight years ago, is so different to what it would be today. Where I live today and my dream home in six or eight or 10 years time might be different to what I think it is today. So just because it's your dream home today doesn't mean it will be in the future. So try and think about if you achieve financial freedom, if you can live anywhere and you don't need to worry about earning an income, would you still live where you live and would you still live in the house that you live in? There's a great saying that I absolutely love, which is you can have anything you want but you can't have everything you want and that's something else to think about as well with the dream home, with how luxurious you want it to be. How expensive do you want to do radio and what city do you want it to be in? You can have anything that you want but you can't have everything you want. And so for me, I wouldn't choose a much more modest dream home in order to have a better lifestyle and to live in the location that I want to live versus a more expensive, maybe more luxurious dream hung, um, but then sacrificing on needing to work more or work on things that I don't want to work on or live in a place that I don't necessarily want to live. So there's always trade offs. And so you need to think about those. It's also good to think about can your investment properties actually purchased your Dream Home for you? So rather than saying, okay, should I purchase my dream home or should I purchase investment properties? Or let's say you want to do both. What if you invested in property and that property was then able to buy your dream home or maybe even by your better dream home than you ever thought possible. So those properties might spin off extra cashflow that allow you to purchase your dream home.