Should your first home be an investment property?
The great Aussie dream has always been to own your own home…but is that dream just a fairytale now? It’s so expensive to live day to day, let alone save up and scrape together the minimum amount required for a deposit for a house. And then once you’re in the house you have that ongoing mortgage payment, and cost for any maintenance. You still want to be close to your work, and walking distance to your favourite coffee spot, and preferably walking distance to the gym and beach. But there’s no way you can afford to buy a place the likes of where you rent now!
And that, my friend, is why your first property purchase should be an investment property for you.
First up, I want to clarify that the first home owner scheme stipulates that you have to live in the house, so you won’t be eligible for that, however getting that scheme is not a guarantee anyway. Please consult your mortgage broker about this, because they will know any inside info to get you the best deal there.
What I want to share with you is a few ways that you can still live in your perfect location. You can still go out for dinner with your friends. You can still afford that amazing bag that goes with those – “Oh my God just stop it, I need them now!” shoes (yes I have a slight addiction to bags and shoes)
Ok reason # 1 for buying an investment property first is the instant income. As soon as you buy the place, you can get a tenant in (and in some cases even buy a house with an existing tenant) which gives you that instant income, to start paying your mortgage off from day one. Depending on the purchase price of the property, and the rental income, this may or may not cover your mortgage repayments.
***I would highly recommend getting some professional help with the search and purchase of your property however, because if your aim is to have minimal outlays each week, then your buyers agent will do the research and find you a place that is cash flow positive***
Reason # 2 for buying an investment property first is that you can still rent a house wherever you want. If you absolutely do not want to cut back on your lifestyle, then you don’t have to. So long as you can show the banks/lenders that you can afford the house repayments (again, please speak to the lending experts here). Live where you love, purchase where you’ll profit. That means that you can still live close to everything that’s important to you right now in your life, and buy in the cheaper areas…generally the suburbs, which are very rentable with the family market.
Reason # 3 You can still get into the market now…before you necessarily think you can afford it. This way you don’t miss out on the low interest rates and stable house prices. If you can afford to put in more than the minimum repayments, you will build up your equity in the property quicker. This, partnered with an increase in property value over time (at purchase time, your buyers agent will help find potential growth areas) will help you get into your first live in home or your next investment property
Reason #4 for buying an investment property first is that you won’t be as emotionally involved. I’m going to put it out there now….from personal experience; buying a house is hard! The more you let things get to you, the harder it will be. If you have all of your hopes on getting a place because you just LOVE the tree at the front of the house (Yes I told my partner I wanted a house because of a tree) or you really really need the house with the massive master ensuite, then you’ll inadvertently block out the negative things. It may end up just not being the perfect house for you, and unless you can really look at things objectively without emotion, then you’re bound to make a few expensive mistakes (or learning experiences as I like to refer to them as). So long story short…for your first home, it may be easier to buy when it won’t be you living in the house, thus potentially giving you a better financial purchase.
Reason #5 You can learn what you don’t want from a place, before you live in! If you have tenants they will soon tell you what is wrong with the place! You can make your own wish list so that you are buying exactly what you want for your dream home!
Buying the right investment property can involve a bit of looking and a thorough due-diligence. I would recommend hiring the services of a buyers agent, or enlisting the help of a trusted family member or friend or other professional who knows the area you’re looking at, what the market is doing and what your financial goals are. That way you can get off to the best start possible for building your property portfolio.
