First Home Buyer $45k in grants!

So I wanted to share our springboard strategy into our portfolio using the FHOG and other incentives available to pretty much any first home buyer in Western Australia.

Originally we were content with the idea of rentvesting and using our deposit for our first IP purchase however we came across a deal too good to be true and proof that there are good deals out there using grants towards OTP purchases. Of course there are some terrible OTP properties but so is the majority of the established market right? As Damien Collins from Momentum Wealth says only 3% of properties on the market are investor grade. So with this in mind I’d like to share our first PPOR purchase with nothing down.

I can feel the judgement from the seasoned investors waiting for the catch. Let me break it down in numbers:

Suburb: Brabham, WA 6055
Stockland estate 22km from CBD with future shopping centre and (metronet) train station (Disclaimer: election promise).

Land: 180m2 6mx30m - $124,000
House: 170m2 2 Story 4x2x2 - $224,000
TOTAL: $348,000

FHOG: $15,000
HAF Grant (Housing affordability fund) $20,000
Developer rebate: $10,000

TOTAL: $303,000. ($80k land component after grants)


Before you balk at the land size this is a fairly new and futuristic concept to WA called terrace housing where FINALLY people are starting to think of how to utilise land more efficiently and effectively. By building up you can fit a 4 bedroom, 2 bathroom, double garage and 6x6 courtyard. This is in fact the first H&L package I’ve seen value in after 5 years in the industry. So yes good H&L OTP purchasers are rare but only because we’ve been conditioned into the status quo of a 100m2 front yard no one uses. For me it’s similar to when an investor says I want to make money through property investment so I must buy any investment property without a second thought for the strategy that suits them. People constantly look at these cookie cutter designs without a single thought about how the family will functionally use the space. Then wonder why they can’t sell it for a higher price down the track when it doesn’t suit the majority of buyers and there are already a million of them in the same suburb. A little off topic but passionate none-the-less. I would also like to officially call the introduction of timber frame housing to WA through these terrace designs. This ridiculous obsession with double brick must come to an end and hopefully these high volume designs will dispel the myth that you must build double brick!
I might start another post on the advantages of fibre cement over brick.

Back on topic though, the $45k in grants were used as a deposit which meant we could save our pennies for our first IP and get out of renting. The display home for this design was valued at $400k 10mins up the road (30km from CBD) on smaller land (2m shorter depth) and basically identical inclusions believe it or not. So we’re hoping for an equity gain to bounce to number 3.

Things to be conscious of: I work in the corridor and know there is at least another 5-10 years supply of land which can and will inhibit any decent growth to occur. Although developers do a great job of pushing pricing up all by themselves, we will need a hotter market in Perth for this to happen.

I’m confident with the future amenities and walking distance to the Swan Valley (arguably Perth’s best kept secret of vineyards, chocolate factories and breweries) it still has potential for growth IMO. If all fails you’ll find me at the end of Woollcott Ave drinking and eating my sorrows away.

Will be sure to keep this thread updated once construction is completed and I can get a conclusive valuation! And if the big bad wolf hasn’t huffed and puffed and blown my timer frame, fibre cement house down. Hopefully I don't have to eat my words. On both occasions.

 

Who did you choose to build with?
There are a few of builders starting the do timber framed in Perth but some of the stuff seen when Innovo was going up was a little worrying. I am totally pro framed - just wary of some brick builders jumping into it and being cowboys

I've not heard of the HAF grant before??

 

Well the construction sounds pretty interesting - I'd love to see the designs and other more info about that.

I honestly have some concerns about your choice of location. A new development area that far out and that direction from the CBD? Are you sure about this?

What made you change your mind about the original rentvesting strategy? This seems like quite a big change from it.

I've also never heard about the HAF grant - it sounds suspicious like something the developer is offering as one of their marketing gimmick rebates

 

HAF - a DSS scheme which is fully subscribed & closed in August 2010.

 

Homebuyers Centre (ABN group). It's funny you mention that. I noticed you've used Thompsons for a few of your projects? They have come across as the only cowboys so far but can only comment on their sales processes rather than actual construction quality. Aveling Homes are the only other doing timber frame and I won't even start on my thoughts on that company. Beautiful homes though. Homes buyers have done a lot of this in Melbourne so I'm banking on their experience there.

HAF - Housing Affordability Grant. There are still some projects offering it now Golden Bay I think is one of them, Mason Green in Harrisdale?