Why you should buy your first property as an investment

There’s one common question that I seem to get asked on numerous occasions and that is whether you should be buying a property as your first home or whether you should be buying your first property as an investment property. The answer to this is simple. You should be buying your first property as a home AND as an investment property.

An investment property has many advantages, with the main advantage of course being able to save tax and claim deductions on outgoings such as maintenance, repairs, inspection costs and Property Manager fees. However, many buyers are making the switch from buying a property as their home to buying it for investment.

For many Australians, buying your first home is unlikely to be the dream house, mainly due to affordability. It is becoming increasingly more expensive to buy a property today and to get on the property ladder with prices continuously going up and up.

The idea now which is becoming increasingly popular amongst first time buyers is to purchase a property to fund your next investment property allowing you to create a property portfolio that will create wealth and lead you on the path to financial freedom. Eventually this will allow you to buy your dream house.

With this approach in mind, many young Australians are either staying at home for longer to save more money whilst collecting a rental income, whilst others are renting in an area which they prefer to live in, but would be unable to afford to buy in.

One perk of buying a property as your first home is that you might be eligible for the First Home Owner Grant and Stamp Duty savings if you are buying a property off the plan or a brand new property. This differs from state to state, but for New South Wales this means you must live in the property for at least six months.

In order to get the best of both worlds you should buy a property as your first home to receive the First Home Owner Grant and Stamp Duty benefits. After living in it for the required period of time, you can then turn it into an investment property allowing you to rent it out and claim depreciation and tax benefits.

For this to be successful you therefore need to remain emotionally unattached from the property in order to make a wise buying decision. You should search for a property in a good location close to amenities, transport and schools alongside a good rental demand and tenant pool as well as being in a suburb that will offer good capital gains and growth potential.

For more information on how you can utilise this approach most effectively, please feel free to contact me today by using the online form.
Published on 22nd of May 2015 by Marty Stanowich
Marty Stanowich
Marty Stanowich

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