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EASTERN SUBURBS – SYDNEY
Property Buyers Eastern Suburbs – Sydney
Buyers Advocate in Eastern Suburbs
Buying Investment Property in Eastern Suburbs
Deciding whether to pay off your mortgage faster or invest is a common dilemma.
Paying down your mortgage (or utilizing an offset or redraw facility) gives you a return that equals your mortgage interest rate, and it comes with no risk of losing capital. This is especially true if it’s with an ADI and falls under the $250,000 government guarantee.
On the other hand, investing in shares generally offers a higher expected return compared to the mortgage interest rate. Historically, stocks have provided returns of around 10%, but this isn’t guaranteed. A higher expected return also brings higher risk, leading to a broader range of potential outcomes. Your actual return could vary significantly from what’s expected.
Some people highlight that the return from paying down your mortgage (or using an offset or redraw) is tax-free because it comes from reducing expenses rather than receiving income. So, it should be grossed up when compared to investing. However, with debt recycling, investing can share this tax-free benefit and even offer more advantages.
The decision between paying off the mortgage faster or investing is quite similar to borrowing to invest. This strategy can be a good fit if you have:
- Sufficient equity to borrow against
- A high marginal tax rate
- Extra cash flow or a buffer to manage interest payments
- A long time horizon
- A high risk tolerance
With regards to paying down excess funds into your mortgage vs investing:
- Having Equity is not an issue.
- Having a higher marginal tax rate is less of an issue (but still relevant) at mortgage interest rates.
- Having additional cash flow is less of an issue since the question is about additional payments on top of your regular mortgage payments. If you can afford your current repayments, this probably isn’t a significant issue.
The last two items are what needs focusing on – a long time horizon and a high risk tolerance. Both of these relate to the fact that investing to achieve a higher return than the interest cost means investing in growth assets. Since growth assets are volatile by nature, you need a long enough time horizon and a high enough tolerance to see your investment’s value fall significantly in the short and medium-term without selling.
Ultimately, the decision to pay off your mortgage faster versus investing hinges on your risk tolerance.
You have a higher risk tolerance when you:
- Don’t have short-term needs for your capital, maintain an emergency fund, have secure income, and carry life insurance.
- Are younger and further from retirement or financial independence.
- Feel comfortable with debt.
A higher risk tolerance enables you to invest more aggressively, offering the potential for a higher expected return. This return is more likely to materialize the longer you leave your investment untouched.
Conversely, if you’re uncomfortable with debt (as many people are), worried about job security, especially with dependents, or concerned about being tied to your job to pay down debt, it’s perfectly reasonable to prioritize paying extra on your mortgage. While the long-term expected return from investing might be higher, the actual return of paying down the loan is certain.
In summary, your risk tolerance will dictate whether to allocate your additional capital towards safe or risky investments (like your mortgage).
Safe investments are ideal when you have:
- Short-term needs for your money.
- A lower appetite for risk (including debt).
- Little or no need to generate higher returns, such as when nearing retirement or financial independence.
Risky investments are better suited when you have:
- No immediate need for the capital (typically a 10+ year time horizon).
- An appetite for higher risk.
- A need for a higher return.
Whatever your choice, avoid rotating back and forth based on fluctuating interest rates on your home loan. Rotating back and forth is the quickest way to erode your returns. Instead, pick a strategy and stick to your plan.
And remember, you don’t have to choose between the two. You can hedge your bets by investing part of your capital in shares and putting the rest into an offset account to reduce your mortgage. It’s not necessarily an either/or decision.
If you do decide to invest:
- Maintain a solid cash buffer in an offset as your emergency fund.
- Consider debt-recycling the amount you plan to use for investing.
As the name implies, the Eastern Suburbs covers the area to the East and South-East of Sydney’s CBD. It includes harborside, coastal, and suburban areas, all close to the City. It’s also known as an elite area, with some of Sydney’s wealthiest suburbs and residents.
The Eastern Suburbs property market is highly respected and tightly held. It’s also diverse, with prestigious harborside suburbs next to more relaxed and youthful spots. Traditional urban areas and beautiful examples of Victorian and other heritage architecture exist.
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No matter which part of the Eastern Suburbs you explore, local properties are always in high demand. This can make it challenging to find an affordable investment. However, with persistence and careful research, there are always great opportunities to be found.
Insights and Analysis About
Eastern Suburbs Property Market
For experienced buyers agents, the Eastern Suburbs property market is a bit of a puzzle. Besides being highly varied, it holds a strong allure for many investors. Even when the overall market is sluggish, interest in properties in this area remains high.
This is because, in many ways, short-term market conditions don’t matter much in the Eastern Suburbs. Some experts even argue that growth isn’t the main focus in prestigious suburbs like Point Piper and Vaucluse. Here, the reputation of the address holds more value than potential capital gains.
Considering this, there are parts of the Eastern Suburbs market that most savvy investors steer clear of. These areas are typically popular among wealthy homeowners, with median prices reaching into the millions. While properties here can see significant price growth, the return often doesn’t match up to neighboring suburbs.
For those looking to invest in the Eastern Suburbs, experts often recommend more moderately priced areas like Randwick and Mascot. Although not as exclusive, they’re equally popular, with demand usually exceeding supply. This often drives up sale prices, leading to strong capital growth.
If you’re seeking good rental yields, focus on the younger, vibrant coastal locations. Suburbs like Bondi and Bronte are consistently popular among students and young professionals, drawn to the local lifestyle. Consequently, these areas offer solid returns, especially for units, which are typically more affordable.
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you in finding the top opportunities. Investments in this region require thorough consideration and research. It’s crucial not to be swayed solely by the prestigious address.
At Ash Buyers Agency we aid dedicated investors in expanding their portfolio. We work with individuals from diverse backgrounds and varying levels of property knowledge. We believe everyone should have the chance to achieve their financial aims and enjoy helping them build wealth through property investment.
With our Property Portfolio Accelerator Model, you don’t need to be a millionaire or market expert to succeed. We concentrate on locating properties that match your financial situation and have uncovered excellent investments at nearly every price range. We also assist you in swiftly progressing beyond your initial investment and continue growing your portfolio – a challenge many investors face.
When you partner with us, you’ll gain access to our comprehensive market insights. When evaluating potential investments, we consider more than just recent market growth and forecasted trends. We utilize various data sources to create a clearer, more reliable understanding of each property’s potential.
Furthermore, we offer our recommendations for maximizing your investment. From necessary renovations to determining the ideal holding and selling times, we’ll lead you through the entire investment process.
Whether you’re new to property or an experienced investor seeking assistance in discovering new opportunities, Ash Buyers Agency can lend a hand. Get in touch with our team today to explore our approach and how it can assist you in reaching your financial objectives.
Discover Exclusive Properties
Your Comprehensive Guide to Buying Off-Market in Eastern Suburbs
We recognize the frustration of navigating Sydney’s fiercely competitive property market, where the most desirable off-market homes and properties for sale seem to vanish in the blink of an eye. But what if we revealed a pathway to accessing a clandestine inventory of exclusive homes and investment prospects? Welcome to the realm of off-market properties – concealed treasures that evade public advertising.
This distinctive approach confers several benefits. Firstly, it broadens your access to a diverse array of properties, including those unsuitable for public promotion due to seller discretion. Secondly, with diminished competition from other buyers, you wield greater negotiation leverage and stand a chance to secure a more favorable deal.
Whether you’re in pursuit of an off-market house, a property to ignite your investment portfolio, or even your dream home, our expertise can unveil this covert market and steer you toward discovering the perfect match.