Purchase Property in Australia v Purchasing Property Overseas

Hi all,

Let's just assume you are 30 years old and have dual citizenship (Aus and another country) and accumulated a savings of AUD400,000 cash.

Option A.
Buy a property in Melbourne which costs ~AUD800,000 (3BR townhouse) and continue paying off the mortgage for "X" number of years.

Option B.
Buy a property in country "Y" which costs ~AUD250,000 (3BR landed house) in cash. You will have an excess of ~AUD150,000 with a low cost of living. (3x lower cost of living)

Your salary will still be paid in AUD as most companies allow remote working now. Worst come to worst, you will have to find a remote job elsewhere.

My preferred option will be B as I don't have a huge financial burden and I can live and travel as I wish.

What do you think?

Comments

  • +5 votes

    The way your question is worded doesn't really distinguish freedom vs debt.

    In this case the bigger factor for me is whether I want to live in Australia in Melbourne or do I want to live in another country. For me I don't think I'd want to live in a different country as I have a great friends base etc. where I live, good job/location and conditions so would pick Australia. But again, money doesn't really come into that equation and doesn't make much sense to me.

    If the choice is literally only "Do I want to have $150,000 in cash and a house vs owe $400,000" then I'd probably go the $150,000 in cash for flexibility, but again - it's such a narrow definition of the problem that I don't think it makes sense in a real practical world sense.

    •  

      Good point mate.

      Sorry, I should have worded it better and put more context into it.

  •  

    B.

    Debt=slavery

  • +4 votes

    I can live and travel as I wish.

    This assumption may not hold true in this new world.

  •  

    I would go with option B., as long as that country provides me with a level of security and freedom that I would be happy with.

  • +3 votes

    Yemen? There are probably some bargains!

  • +4 votes

    Financial Freedom

    I really cringe when I hear these words. That term (and "passive/residual income") has been abused by the pyramid schemers way too much.

    My preferred option will be…

    Well, there is going to be a huge difference between an $800K home and a $250K home. The key elements that make up the pricing include things like size, location, old/new, materials, technology, convenience, etc. It all comes down to how you value those things. For example, would you be comfortable living in an older home that's far away from everything? There's certain subjective things that are difficult to put a price on.

    And when you eventually sell (yes, it is a sellable asset), you're not going to be losing the entire $550K difference that you would've put into the more expensive home. A rise or fall in price will generally be relative to what you initially paid.If the prices rise, then you could potentially make more money (in dollar value) on the home you initially paid a higher price for.

    PS: You can also rent and just keep the $400K in your pocket.

    • +4 votes

      There doesn't need to be any difference between the homes. You can get better quality houses than an $800k Melbourne weatherboard gyprock palace, for less than $250k overseas. Australian property values are cooked by absurdly over valued land, not house quality. And Australian house quality isn't good at basically any price.

  • +3 votes

    it will depend on what Country Y is…
    Some places may have a lower cost of living but the quality of living is much worse than Australia

  •  

    Which country would you prefer to live in?

    I wouldn't rule out living in one country just because you would have a modest mortgage that you seem well within your means to service.

  • +1 vote

    I think he is talking about India

    •  

      Hell no, not even for a 50k house… its too overcrowded, it’s hard enough driving to work in peak hour as it is here let alone Mumbai.

  • +2 votes

    Your salary will still be paid in AUD as most companies allow remote working now.

    Don't forget that by living outside Australia you are no longer a tax resident, hence your ENTIRE salary will be taxed at a 45% tax rate.

  • +7 votes

    Why not live in Australia in somewhere that isn't Melbourne?

    •  

      Plenty of properties out of the city you can get cheap big places

  • +1 vote

    You should speak to your accountant re: option B, as you'll have a large asset from overseas that you may need to declare when you do you AU tax return.

    •  

      OP is planning to live in that house, so it'll be covered under the primary residence exemption.

  • -1 vote

    YOLO.

  • +1 vote

    The historical term for this is being an expat - getting first world wages while having developing world expenses. But it used to be limited to a small group of globe trotting execs.

    These days it is much more achievable, as you have pointed out.

    The reality is most people don’t especially wish to leave the family, friends and culture they grew up with to live far away. If none of that is important to you, then financially it makes sense.
    You might want to give some thought to how such a decision would impact you in the future, as you get older. And whether you will be able to secure re,ote work as readily as you hope. Right now, people pay Australian wages for local staff that don’t attend the office. And lower wages for international workers doing outsourcing who also don’t attend the office. The trick is to stay in the first group as your address, experience and network of colleagues increasingly looks like the second.

  • +1 vote

    Option B until your asked to drop into the office for an important meeting…

  • -1 vote

    Financial Freedom Vs Mortgage Debt
    What do you think?

    Net assets.

  • +4 votes

    I would not want to live in another country unless it was maybe Norway or Canada or some other safe, good country. Probably can't get a nice place for 250k though.

    You could also live in a country town in Australia. 250k can get you a 4 bed house in many places. I can't envision a country where I could get a house for 250k that I would choose over living in a country town in Australia.

    • +3 votes

      I tend to agree, but note plenty of Italy, Spain, France, Germany and other euro countries have affordable real estate, and you would hardly be slumming it.

      • +1 vote

        Add Portugal to the list. With INCREDIBLE low cost, high quality food.

        For the OP, if you are 30 yo and living in another country sound tempting then you are certainly ready for it.

        Why not buy overseas, try relocating and then decide for the long term.

    •  

      no way I'd spend that much money just to bury my head in the snow for 9 months a year.

  • +1 vote

    What country?

  •  

    Who can save 400 grand

  •  

    Option B.
    Buy a property in country "Y"

    What country is important for tax liability.

  •  

    Companies seem to be becoming reticent to allow staff to continue to work from home.

    •  

      Some, but not all. My company is encouraging it but not on a full time basis and it certainly wouldn't extend to OS locations. If that worked, then they might consider outsourcing, ie paying a local in the local currency.

  • +1 vote

    You may not get the math you are expecting with option B for two reasons. Firstly, even in companies that promote fully-remote work, the majority will pay salaries based on the place of residence. It's ok if you work in AU and went to, say, Thailand for 3-4 months. But if you decide to move to Thailand permanently, the majority will review your compensation and likely to adjust according to local wages. Not saying that there are no companies that don't care, but if they are a proper business - they will.

    Secondly, companies need to have certain legal requirements that depend on employee residence. Say a company need to get some insurance that is dependent on location. If such insurance doesn't cover the country you are moving to, they won't be able to legally have you as an employee. My company, even before the pandemic, was mostly remote (I think the official number was between 70% and 80%). Earlier this week I referred a Malaysia based ex-colleague for a remote role. Just got a message from HR, they can't hire him as they can't hire in Malaysia.

    So before you decide on option B make sure to discuss with your employer to avoid expensive surprises.

    •  

      Point #1 - it probably depends on the role of the employee; the company I work for has multiple 'consultants' who work from different countries but are definitely paid competitive Australian rates.

      Point #2 - good point, but hiring employees in a certain country is different to continuing employment from a different country, with all salary etc., continuing to be paid in Australia.

    •  

      companies need to have certain legal requirements that depend on employee residence

      I think it ONLY refers to being allow to legally work in Australia or not.

      I doubt there will be issues if working remotely from a sailing ship in the middle of the ocean. Or in Papua. Or in Switzerland. Employer doesn't need to know.