First home buyers should consider flagging tradition and purchase an investment property before buying their own home, according to Mortgage Choice.
Mortgage Choice spokesperson, Belinda Williamson, says that by taking a different approach to buying a dream home, potential buyers may be able to achieve their property goals sooner.
“The old expectation of first time buyers purchasing a home before an investment property is not necessarily the case in today’s market. While affordability has improved of late, it is not uncommon for first time property buyers to dip their toe into the market by purchasing an investment property first. They then rent the property out and use the life lessons, possible tax benefits and any financial gains to put them in a better position to buy their first home.”
Williamson says this is a particularly useful strategy for younger people who want to enter the property market but have been priced out of buying a home in the area they want to live in.
“A clever investment property purchase and a little patience could see these homebuyers-to-be residing in their desired suburb sooner than expected.”
Williamson says first home buyers need to do their research before taking any further steps and ensure their finances are in order. She says potential investors should speak to their accountant or financial advisor to ensure they are aware of the opportunities and risks involved with the purchase.
“Research is the most important step before you make any decisions about purchasing a property. If you are considering buying an investment property, you want to make sure you have thoroughly investigated the property’s potential rental yield, tenancy demand and capital growth, as well as your finance options and your rights and responsibilities as a landlord.”
She says first time buyers sometimes fail to realise that buying an investment property is different to buying a home.
“When people purchase the home of their dreams, they look for practical aspects that will make them feel comfortable living in the house. However, when purchasing an investment property, buyers are looking at whether the investment will produce a positive return and will be relatively easy to manage. Once buyers have a better understanding of all their property and finance options they can make an educated decision about the best way to achieve their goals.”
Williamson says Australians’ ‘love-affair’ with property doesn’t look set to abate anytime soon, but cautions that the way first home buyers view their perfect match for their first property is changing.
“Consider expanding your playing field to look for properties that could work well as a first investment property and that could provide the financial kick-start you need to buy your first home in a place where you ultimately want to live.”