First home buyer investment strategy - VIC

Hi everyone,
Stumbled across this forum through my Googling and have found some great information so far.

I'm new to all of this and realising that it's a jungle out there in terms of how much there is to know! This forum is one of the places I'll be turning to to help increase my knowledge.

I'm a Victorian-based first home buyer at the point where I have saved enough of a deposit (90k + ~30K gift from parents) and am now in the early process of researching and gaining pre-approval for a house or townhouse in VIC.
I would love to hear your thoughts on how I'm thinking about approaching this.

I'm thinking of purchasing my first property an an owner-occupier with the view of converting it into an investment property after I've satisfied the 12 month occupancy period.

My reason for taking this path is that I'm in a lifestyle position where I afford to up and move for 12 months with minimal issues (no kids and I'm in a job where remote working is fairly easy). My first property is where I could do with the greatest leg up given my current salary, lack of other equity, therefore taking advantage of FHO benefits make most sense to me now.

On the flip side of the coin I am wondering whether it's worth at all considering skipping on the FHO incentives now and purchasing my first property as a pure investment, and saving the FHO incentives for when I actually want to purchase the home I want to live in.

Reasons I can think of are:
- Increased options to choose from - can buy existing properties
- Save me having to move for 12 months (not a huge hassle but still disruptive)
- Potential tax deductions (thinking of using a buyers agent for this purchase, which I believe can be deducted from CGT if the property is an investment but not if it's a PPOR)

I'm also not too sure around the requirements for getting an investment loan. At the moment I am going through pre-approval for a normal/personal loan so I might have to start the pre-approval process again if I changed tact.

What are your opinions on taking one of these two routes? Are there other considerations for me to think about?

Cheers

 

Welcome @Proper_Tea - and keep well!

 

Hey and welcome

I suggest you buy with the end in mind. FHG aside - is buying a new property a good investment? Is buying established better? If it's going to end up as an investment, it needs to be a good investment from the start.

 

100% agree with @Jess Peletier . Don't focus on short term incentives if the purpose is a long term investment. Focus on fundamentals for what you are trying to achieve long term.
Eg- are you wanting capital growth, yield, or a combination of both? Once you understand your goals, timeframes and define your exit strategy - then it is time to consider location and property type.

 

Question: Are you renting? Living with your parents still? Are you OK with living with them if you go the route of IP first?

Personally if it was me, I will go IP first. Why? Building an Asset Base to replace your Active Income takes time. The earlier you start the better. If I can do it all over again I will start when I was 18 yrs old. Hindsight is always 20/20 so I will keep on harping to young generations like yourself to START YOUNG. Be Financially Independent as early as you can.

 

Lots of gold here

 

Hi all, thank you for the advice, much appreciated. @Jess Peletier and @MelindaJennison @The.Night.King that feels like good advice, I think I am getting swept up in all of the short term incentives like the FHOG and 25k builders grant, but really this is a long term investment so I should approach it that way. I've decided to engage a property planner (from the guys who run the property couch) to hash out that plan for me on what that exit strategy is going to look like and what my goals for ROI are.

@The.Night.King I'm currently living in the place my partner owns, paying rent. I'm considering the idea of 'restvesting'. 18 y.o. wow that would have been ambitious! It took me til my mid 20's to be really conscious about my finances and it wasn't til my later 20's that I felt in a financial position to start thinking about property. It feels like a huge hurdle for most my age I think, where you know that many suburbs where you grew up (I grew up in East Melbourne) are really far out of your reach!

Cheers.

 

well she did it

 

Getting burdened with a loan at 18 is literally the worst thing you could do. When you are 18 you should explore your possibilities, study abroad, travel overseas, you don't know where your calls is and where your career will lead you. Getting a large loan at that stage of your life is actually short sighted. Even if you settle with a normal job afterwards, it is one of the only times in your life that you are truly free.

 

Start from the fundamentals but if you decide on a quality property, it can be worth while living in it for a while to claim the incentives. But don't start from that point of view.

 

I agree with this. That discovery period between 18-25 was so important to me, the time learn about life and not worry about finances. I personally would not have managed it if I'd had a mortgage, job and university fees to tend to at 19. That said, everybody is different, if one can happily manage those things at 19, kudos to them!