Many wannabe buyers simply can’t afford their dream home. If you are one of them, it might be time to think first investment, not first house, and get one step closer to the great Australian property dream.

Get your foot in the door Even if you can’t afford your dream home, there’s no need to wait - the sooner you get your investment foot onto the property market ladder, the better. Purchasing an investment property may enable you to start the stepping stone process, benefiting from the income from your tenants in the short term and helping you fulfil your long-term property dreams.

Stay put

For many it is more affordable to continue renting where they are (especially if they live in a share house) or paying board (if they live at home with the parents) than it would be to buy a home to own and occupy. This is especially appealing if you’re just starting out and haven’t yet reached your ideal income level.

Big isn’t always best

While you may dream of owning a big family home with all the trimmings, you don’t need to dream quite as big if you’re looking for an investment property, which will probably be much smaller and more affordable. When looking at properties, ask yourself what type of home will appeal to renters. Location and functionality are important. Centrally located apartments and low-maintenance townhouses are generally considered solid rental options and more often than not will cost you less to buy than a larger family home.

Tax breaks

There are many potential tax breaks associated with owning an investment property, such as negative gearing, so speak with your accountant to ensure you understand the tax implications relevant to your financial situation.
main.psd

Live in or get out

If you want to claim the First Home Owner Grant, make sure you know the rules before committing to buying an investment property. If you claim the $7000 grant, you must be prepared to move into the home within one year of buying it and stay living there for at least six months before you’re able to get a tenant in to pay the mortgage for you.

Do the sums

There are a few things to consider before buying an investment property instead of a first home. Speak to your lender and ensure you understand your repayment obligations. Could you make the repayments if your tenants were to suddenly move out? You will also need to allow for costs such as rates, maintenance and landlord insurance and you’ll need a reputable property manager.