Скачать или смотреть Cheap Properties vs Expensive Properties | What's the BETTER INVESTMENT?

Today we are talking about what people don't realize when buying a cheap property vs an expensive property.

I'm going to break it down for you and show you the simple truth behind this.

So lets say we have a 1 Million dollar property and we have a $300,000 property.

Now we want to know what is going to increase in price in the future.

Lets look at the expensive property first: if we buy a property for $1 Million dollars

and we borrow 80% we're going to need around $260K to cover the 20% deposit and the costs here in Victoria obviously the cost and going to be different depending where you live.

Now in order for us to make a 20% profit on our money we need the property to be worth $1.2Million at some point in the future.

Now lets look at the Cheaper property: if we buy a $300,000 property.

and again we borrow 80% we need around $75K to cover the 20% deposit and again the cost to purchase the property.

In order for us to make the same 20% profit we only need the property to be worth $360K at some point in the future.

Now here is what people don't realize, if we look at the general population its fair to say that more people are able to save a $75K deposit than a $260K deposit.

If we look at the loan for each property and remember we were borrowing 80% we would have a loan of $800,000 on the 1 million dollar property and a loan of $240K on the 300K dollar property.

Now you might say well why does that matter if someone has the $260K deposit and can afford the loan repayments on $800,000 why not buy a more expensive property in a better area.

And this is the biggest thing people miss. Because the property market is driven by competition and there is far more of the population that can afford the cheaper property than the expensive

There is therefore more demand for the cheaper property.

Also the amount of income a person needs to make to afford an 80% loan on a 1 million dollar property vs a 1.2Million dollar property is a significant amount when compared with the income needed to have a loan on a 300K property vs a property with 360K

So there you have it, the simple truth behind expensive properties vs cheap properties.