Skip to content
Top Tips

An investment as a first property

31 Jan 2018

Plenty of people living at home or enjoying the perfect rental life still have a nagging voice in the back of their head, warning them to get a foothold on the property ladder before increased prices put home ownership out of reach. A growing number of first home buyers are opting for the best of both worlds – staying put and buying an investment property.

But what should be considered? Credit Union SA CEO, Grant Strawbridge, shares his top tips.

Great assets

Australia’s increasing property prices are making it difficult for many first-timers to secure their first purchase. Perhaps the greatest benefit of an investment-first strategy is that you can get your foot on the property ladder without having to make any compromises. By the time you’re ready to buy your own home sometime in the future, your investment property will be a valued asset, and could allow you to go shopping for a home that’s worth more than you could originally afford or in a more preferred location. But remember, an investment property is a longer-term commitment if you want to earn good capital growth.

Cheap and cheerful 

An investment property doesn’t need to “tick all the boxes” of your dream home. Because you’re not buying a house to live in yourself, you can get something cheaper in an area that isn’t your preference. Buying with your head and not your heart lets you focus on securing good rental growth and an increased future sale price.

Cash stash

As well as getting you onto the property ladder, your investment property should be generating enough rental income to cover most, if not all of the mortgage so that you don’t need to dip into your own savings. It’s also a good idea to set aside some emergency money in case the property lies vacant for a while or a major appliance – like a water heater – suddenly needs to be replaced.

Tax benefits 

Owning an investment property could also provide taxation benefits, but you’ll need to discuss this with your accountant and trusted financial advisors to best understand the true impact on your own circumstances.

Secure shelter

The time may come when things change and you decide to fly the family coop or stop renting. Moving into your investment property and making it your home offers an easy solution, and could take some of the stress out of moving home. 

Before buying

It is always a good idea to make an informed purchase decision. Getting a property inspected by a reputable building consultant will highlight any areas of concern, and can avoid the stress of uncovering a termite infestation or serious structural issues down the track. Before you go shopping, have pre-approval in place for a loan, and look around for any great finance opportunities on offer. For example, Credit Union SA’s $5,000 First Home Buyers Grant is available to eligible first home buyers of an owner-occupied or investment property, on both new (fully constructed) and established properties when borrowing a minimum of $300,000 with a loan to value ratio over 80%.

To find out more, contact Credit Union SA on 8202 7777.

This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner.