I have $470,000 in cash and have been dreaming of purchasing a ~$750,000 house in a great school zone and renting it out while I continue to live in a modest rented apartment. I planned to renovate the said house after 5 or 10 years and either selling or moving in depending on my circumstances at the time.
However, an opportunity has come up and I am able to build a brand new dwelling for around $500,000 in a not-so-great-area and one where I would not necessarily want to live in. I would rent the place our while continuing to live in my modest apartment. However, because of my savings, it would mean that in a few years time I would start incurring interest and therefore paying tax on the interest earned. I see this as a not so ideal situation.
The second option would save me money initially but will not appreciate in value as much as the first one would. Also, the second option would not provide me with a place I’d love to live in. And, for some reason renting a brand new home doesn’t sound like the smartest thing.
What do you all think? Am I overthinking this? What other benefits are there if I go with the second option? I must say that the main reason behind me considering option 2 is because I’ve struggled to find a house that suits my criteria.
I am in Adelaide, 36 and single.