Should my first property be an investment property?

Life doesn’t have to be a choice between living it to the fullest right now or being tied down in your own home with a huge mortgage.

Did you know you could get a foot in the door of the property market with an investment property as you may not need as large a deposit? The taxman and your tenants rent can help you pay off your investment loan.

You may only need to take a little more care controlling your budget and finances, and before long you could be sitting on a nice little investment property that is making money while you wait until you can afford to buy your dream home.

Have you heard the saying “making money while you sleep?” It applies in this instance!

Yes you can buy an investment as your first property!
Buying a small house or apartment in a low cost area and renting it out can be a good way to build equity over the next few years so you can eventually buy your own home in an area where you want to live.

It is a strategy that appeals to many young Australians. While their lifestyle and work commitments are flexible, so too can be their living habits.

You can buy an investment property in one suburb – or even another state – while you keep renting in an area that’s convenient or where you prefer to live. Even staying at home for a while longer can be attractive while you purchase your first investment property.

When you are struggling to save your 20% deposit home ownership can seem out of reach. Property ownership may be realistic if you consider starting out with an investment property.

How it works
• Lending institutions include a percentage of the expected rent from your tenants as part of the income towards servicing your investment loan (so you can probably borrow more than you could if purchasing a home).

• Loans for 90% of the property value are generally available for property investors, meaning you don’t need to have a large lump sum available. This may leave you to only fund the legal costs, stamp duty and lenders mortgage insurance (often around 4-5% of the purchase price). When you talk to us we can calculate these figures for you and work out your best options.

• Investors typically use interest only loans, so mortgage payments are much lower, when adopting a medium to longer term capital growth strategy.

• Negative gearing tax benefits are available in cases when your costs of investing are greater than your income from the property. This means a refund from the tax man. Way to go!

But you don’t want to miss out on the First Home Owners Grant (FHOG)?
In some states you need to live in the property first to qualify for the FHOG. So this may not be an option available to you if you elect to go ahead with an investment property strategy.

This may be a reasonable concern. However it may not be relevant if you are struggling to get together enough of a deposit to buy the sort of home you’d like to live in. Being in the property market may be better than not being in it. You may well find that the capital growth you could experience by being in the market is well in excess of the grant you could receive should you delay your purchase to save your additional deposit.

Instead you can focus on your potential capital gain and the rental income to help you start building wealth now. You may just find that by investing this way you will be ready to buy your own dream home sooner.

Visit to determine your ability to claim the FHOG in your state and call the office to find out how much you could borrow to buy your first investment property.

*Disclaimer: This article is generic in nature. All investment decisions should be considered wisely and based on your personal and financial circumstances. Seek proper advice before committing to any course of investment action. This is not deemed as advice.

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