top of page
Writer's pictureJathu Srikanthan

Should I buy a 2 X 400K property or 1 X 800K property?

This is a common dilemma faced by property investors.

Here are some reasons on why 2 X 400K properties would help someone build a portfolio faster with lower levels of risk.



1. Diversification and exposure to different markets

When you purchase 2 X 400K properties, you have the opportunity to diversity into 2 different markets. Therefore, you significantly reduce risk with regards to issues like market fluctuations, and rental income loss due to the fact that if one property does not perform well due to market fluctuations you still have other property which could perform well and if one property was vacant and you had a loss of income you still would have income from the other property to help with your cash flow. With a 1 X 800K property you are exposing yourself to 1 market only.


2. Cash flow

2 X 400K properties would give you a much higher cash flow than a 1 X 800K property due to the fact that rental yields are generally much stronger on cheaper properties. The 2 properties would be able to pay for themselves while the 1 X 800K property would be negatively geared becoming a burden over time.


3. Growth prospects

It is a myth that cheaper properties do not grow rapidly in value. In fact, if the property is selected in the correct location at the correct time it could outperform the more expensive property in terms of its growth rate. You could potentially purchase 2 X 400 K properties in 2 different markets that are about to take off.

18 views0 comments

Comentarios


bottom of page