Buy Your First Home Or Buy Your First Investment Property

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Buy your first home or buy your first investment property. 

When considering or buying your first home, there’s so many things to put together to get you to the right decision. Now, in terms of buying your first home, let’s think about why you wanted to do that. Maybe there’s things around having your own place to call home, maybe things you could touch up, improve, and feel just free that it’s your own place. 

Maybe you felt that it was dead money and you didn’t want to pay rent anymore, and you just wanted to stop that and get to your own place as well. Or, maybe it was just a part of your goal and you didn’t want to build a new investment property portfolio, and you just wanted your first home, and that was your property journey right there. There’s so many reasons and so many ways that you can get into buying your first home that it actually isn’t a right or wrong decision, but it all comes back to your goal of what do you want to do longer term? 

If you take a moment and now consider what investing could look like as an option, it’s basically going yes, there are a couple of things that are cons. First thing you might think is what about my first homeowner’s grant? Yes, that can actually disappear because you’re buying that investment property first. There are some unique ways to consider, but that’s a conversation for another time. 

In terms of buying your own investment property as your first property, you might say, “Well, I want to do that because I’m renting, and it’s cheaper to rent instead of live, and I can buy the property across the country as an investment for the right market cycle.” You may say, “Well, I’m actually just not ready to settle down yet, and I’d rather wait for my dream home, and invest now and build up a portfolio.” Because if you’re looking to save, it’s not an easy task to do, but if you have multiple investment properties building in equity, plus your savings, something to deposit for the first home or the dream home to live in, becomes a little bit easier. 

Now, why people get stuck with a decision of the two is largely because of the grant. The first homeowner’s grant is what gets many people stuck. It’s almost like saying I’ve got this really awesome gift for you, but you’re stuck between whether you want to take it or not. Now, first homeowner’s grants are ranging of properties of different price ranges depending on the state you’re at. But if we’re taking a say a $400000 property or just under that as an example, in New South Wales that’s almost close to 12 to 15K plus in stamp duty that you’ve saved. 

When you’re reviewing that, you start to think, “Well, that’s a lot of money. Imagine if I had to save 12 to 15K again.” It’s not simple. So, when doing that decision making process, this is what helps you get unstuck. If you were to purchase an investment property and if you were okay with the lifestyle of where you’re living, under 400K property and a percentage of growth that’s required to make up that 12K is extremely small. So, if you’re thinking of, “Well, now I have access to all investing markets across the country to look for my first investment property, and if I can get a market where the cash flows are right, the growth drivers are right, what does that 12K really mean?” Because what if you’re buying in a market that you have no investing consideration on, and just because you want a slightly higher loan, or a 12K or 15K benefit, heck, even if you make it 20K, there are still investing markets with growth in these properties outweigh 20, 30, 40K benefits or more. 

So, when considering, don’t go for what’s shiny all the time, think about your long term journey and understand well, the grant should not be considered as a means of why I want to buy the first home, it’s do I want to live in there now, and am I happy living in this moment than investing later on? Or, do I want to build a portfolio before I look to buy my home? Don’t include the grant as a key calculation, because it can be easily outweighed simply by the investment property result. 

That’s it for us here at InvestorKit, the experts and wealth creation, helping you take action.