Buying an investment property as a first home could be a solution for those prospective first homebuyers who are still living at home or renting.
As lower interest rates and rising house prices make it more difficult to enter the established home market as owner occupiers, savvy first home buyers are now purchasing an investment property as their first home and renting it out.
This allows them to take advantage of potential tax benefits as the rent from the property covers the mortgage repayments. Meanwhile, the first homebuyers continue to live at home with their parents or in shared accommodation and watch their investment grow in value.
Over time, the property may hold enough equity for the owner to purchase more investment properties and build their property portfolio.
As an added incentive, first home buyers who own several investment properties can still qualify for the first home owners grant down the track when they are ready to buy a home to live in.
Although you will need to pay stamp duty on the investment property, there are ways to find a solution that will work for your situation. Many first homebuyers are living with parents or relatives who are keen to assist. Options such as parental assistance or guarantor loans might be suitable and effective ways to get your property ball rolling.
If this sounds like an appropriate solution for you, make sure you seek independent advice on the tax benefits associated with owning an investment property and ensure that they can be leveraged effectively for you.
Investing also requires careful research of the surrounding area, growth rates and potential yield, and of course going through the usual practices of getting a building inspection and purchasing a property that is not going to cost a lot to repair and maintain. The idea is to find a property that will be easy to rent in its current state with very little out of pocket expenses.
This method of home ownership is certainly gathering momentum as first homebuyers look for creative, cost effective ways to get themselves onto the property ladder.
If you’re wondering if it’s a viable option for your situation, contact us to discuss your situation with one of our brokers.