Saving a deposit and buying your first property is a dream held by many Australians. But that first property doesn’t have to be one that you move into and live in.
One alternative is to buy an investment property. This can help you get a foot on the property ladder while you continue to rent or live at home.
Which is right for me?
Choosing between a home and an investment property will depend on your personal circumstances and the property you’re thinking about buying. Consider your financing options, including investment home loans and fixed rate or variable home loans.
Benefits of buying an investment property
Tax benefits are one potential benefit of owning an investment property. As part of a negative gearing strategy, you may be able to claim deductions on your maintenance costs and other outgoings such as repairs, mortgage interest and rates.
Another benefit of continuing to rent is that you may be able to live in a better property or area than you could afford to buy. Rents in high-end homes tend to be less than your mortgage repayments would be should you buy that home. So you could buy your investment property in a more affordable suburb while continuing to live in your preferred area.
Benefits of buying a home
There are of course many benefits to living in your own home.
Being able to renovate to suit your tastes and needs, having security of ownership, and feeling a sense of pride in your home are important factors to many people.
How does buying an investment property differ from buying a home?
When searching for an investment property, rather than looking for a home that you want to live in, you should search for a property that will be popular with the type of tenant in that area. Transport links, proximity to good schools and rental demand for that area are often important considerations.
Instead of looking in a suburb you might want to live in yourself, consider a suburb that offers the potential for good capital gains and/or high rental returns. Our complimentary Property and Suburb Reports provide the latest information on new listings, auctions, recent sales and suburb profiles.
How much can you borrow?
Whether you want to buy a home or an investment property, use our Budget Planner to help you work out how much you could afford to repay each month.