First Time Investor - Using FHOG on Home and Convert to IP

Hi All,

I've made a mistake in the past and bought an IP without using my FHOG first and converting it to an IP. I'm still eligible to use my FHOG and have built up a decent amount of savings to buy a new home.

I am considering buying a house and land package in WA for ~ 350k with my FHOG. Once I have this home, I am thinking of renting this property out as early as I can, and rent somewhere else to live.

I'd appreciate any feedback on this plan as I'm quite unfamiliar with property investing still!


Cheers,
Greg

 

The house and land package might damage you for more than what you gain from the grant.

why house and land? Where? Why do you think that area will give you more growth than another area with similar prices?

fhog is like those gift cards you get from buying whitegoods. Fine if you actually need the product itself.

on a practical level, impact on depreciation, moving costs, no deductions while you live there etc might cancel out the grant anyway.

 

Thanks for replying!

I don't particularly believe this area will give substantial growth over other suburbs (I do see potential though, near school, coast, city, etc).

The main reason for buying is that my budget is quite low (below 350k) and the current properties I'm looking at in that price range aren't as promising. I'm also getting married soon and will need a place to live in.

As a complete back-up plan I can choose to end up living in the property long term.

My other option is obviously is just wait longer till I can gather a larger deposit and afford better IP options.

 

I wouldn't do it just for the grant or tax benefits. It needs to stack up as an IP by itself.

I'm super sceptical that you could find something that stacks up as a H&L package compared to just an established property mind you. You say that you're still unfamiliar with property investing - but what did you learn from your other IP purchase?

I actually used the FHOG myself for my first "IP" - lived in there and renovated for the first 6 months (ended up being 9 months actually), and then moved out and rented it. Worked great mostly because the actual property was a good buy - the no-stamp-duty thing was just a sweetener.

 

Hey rofl,

I have about 80k deposit to spare, my future spouse and I also has some money saved up to add to this if we really wanted to but we'd rather use that money for emergency savings/wedding and so on!

 

Thanks for sharing this! You're right I'm still actively searching for other properties but I came across the home and land package and wanted to know if it was a viable option.

It seems that it may not be the best idea right now, which I understand! I think I am also too caught up on getting the FHOG. I'm now curious if I should just buy an established property and use my FHOG for the stamp duty concession and live/renovate and rent out eventually like yourself.

 

You say

Yet

You like moving?

 

Both established properties and new builds get the stamp duty exemption which is the more significant of the benefits to being a first home buyer. Building gets you an additional grant of I think $10k but , as others have pointed out, it might not be worth the $10k to build in some areas

With your deposit I think you could get something quite decent that is already built and not a squillion miles from anywhere. Where abouts do you work?

 

Hey mate,

Thanks for your helpful reply. Most of my work is FIFO on an oil rig (2 weeks on/off) however when I'm not doing FIFO I work in the city.

I think I will continue to search for established properties within my price range till I'm satisfied it's an ideal property to invest in.

Really appreciating the constructive replies most people are giving!

 

Awesome job which should help with the $$. I'm ex Chevron and Woodside.

You are lucky to be in one of the best positions/time of the market to buy into some areas that you won't be able to afford in the future. I think the stamp duty concession works best under $430k last time I looked and your deposit might stretch that far if you use some LMI

Some cheap and cheerfuls I've been watching for the FHB market
21 Grafton Road, Bayswater, WA 6053
17 Bottlebrush Drive, Morley, WA 6062
209 Roseberry Street, Bedford, WA 6052
https://www.realestate.com.au/sold/property-house-wa-bayswater-132317574
7 Fernlea Street, Warwick, WA 6024