One house or a few?
Question from Lynda updated on 25th January 2013:
My family and I have several possibilities for investing in property and we don't know what to do. Should we buy a large house (around $700,000) and pay off the mortgage? Or buy several smaller houses and rent them out. Or do both?
Our expert Kris Pedersen responded:
You need to drill down into what you want to achieve to decide what the best option is. You also need to take certain factors into account like what your risk profile is, what age you are at (if for example you weren't too far away from retirement this is very different to someone who is at the start of their working life), what potential life events you may face in the short and medium terms. If you are purely talking about what is the best from an investment point of view then it is likely smaller houses are going to provide a better cash flow however this doesn't take into account capital growth (investing for this is more speculative rather than actual investing)and things like small houses in smaller towns may have vacancy issues. Start by thinking about what you want to achieve and then look at each scenario and analyse what attributes are most likely to help you reach what you are aiming for.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz
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