My Dad says I’m wasting my money on rent when it could be going into a mortgage and he’s offered to lend me $35,000 for the deposit on a flat. However, anywhere I could afford to buy is nothing like as good as where I am renting. Any thoughts?
ANSWER: Buy a flat and rent it out to someone else. Negative gearing could make this an even better investment that buying somewhere to live.
These are ballpark figures but if you use dad’s money to buy a $380,000 flat, you could let that for about $1600 a month.
A loan might cost about $2300 a month at current rates. Add in levies of, say $300 a month, and you’re looking at a shortfall of $1000 a month.
If you can find that $250 a week from your current budget, the shortfall between rental income and outgoings is tax deductible.
A financially tough first year or two is a great investment in the future, as you get to live where you want, you’ve got a foothold in the property market and Dad is happy. Talk to an accountant.
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