Property purchasing housing hacks
If you're finding it hard to buy a first home in the area you'd like to live in, it can be worth thinking about making your purchase an investment property.
Housing hack – should your first home be an investment property?
Buying a first property as an investor instead of an owner occupier can open up a world of choice – and bring some unexpected perks. Here’s what to weigh up.
Recent housing finance data from the Australian Bureau of Statistics¹ shows that lending to property investors is racing ahead, rising 12.1% over the year to October 2023, compared to 1.4% growth among owner occupied home loans.
According to REA Group², record low vacancy rates are one of the key reasons why investors are jumping back into the market. Low vacancy levels mean properties are unlikely to have difficulty attracting a tenant.
Add in rents that have soared 14% across Australia’s state capitals in 2023³, and it’s easy to see the appeal of property investing.
In fact, if you’re finding it hard to buy a first home in the area you’d like to live in, it can be worth thinking about making your purchase an investment property. It lets you take that first important step on the property ladder – and as we’ll see, it can be kinder on your cash flow than buying a place to live in.
Buying as an investor can open up affordable locations
Just like an owner occupied home, a well-located investment property can help you grow personal wealth. However, one of the pluses of buying an investment property is that the location you buy in doesn’t have to be shaped by personal needs such as proximity to work, friends or family.
As an investor you have the freedom to buy outside your local area, even interstate. This can open up more affordable locations better suited to your budget.
Your rental property is likely to grow in value over time, and when you are ready to buy an owner occupied home in the future, you may be able to tap into the equity you’ve built up in your rental property to help fund your next property purchase.
Earn rental income
As a property investor, you can expect to receive rent. That’s extra income that can go a long way towards paying off your investment loan.
You will need to pay ongoing costs of owning a property such as insurance and maintenance, but many of these costs can usually be claimed on tax.
It is always a good idea to speak to a tax professional to understand whether you could benefit from tax savings by investing in property. However, many property investors pocket ongoing tax savings year-after-year through ‘negative gearing’. This is where the costs of the property outweigh the rental income it generates, creating an annual loss that may be offset against other income including your wage and salary.
The tax savings of negative gearing not only provide extra cash to manage the ongoing property expenses, they can also make it surprisingly affordable to own an investment property.
Won’t I miss out on first home buyer benefits?
First home buyers may be eligible for support schemes such as the First Home Owner Grant (FHOG).
While these schemes can offer a valuable financial helping hand, they are not open to everyone. In NSW for example, the FHOG is worth a maximum of $10,000 but it only applies if you buy or build a brand new home⁴.
When you buy as an investor, you won’t be eligible for first home buyer support programs.
This is definitely something to weigh up, though you could find the annual tax savings of a rental property outweigh the one-off benefits that may be available to first home buyers.
Of course, when you buy as an investor, you will still need somewhere to live. This may be the family home, or renting a place in the suburb you want to live in. If you decide to rent, it’s worth doing the sums to be sure your cash flow can handle owning an investment property while you’re a tenant yourself.
Community First loans for investors
If you’re happy to make your first property an investment, Community First offers a variety of home loans to help you buy an investment property.
You can borrow up to 90% of the property value for new apartments and up to 95% of the property value for other types of dwellings (some suburb exclusions apply)⁵.
Our investment loans also offer competitive rates and flexible repayment options, with a choice of variable or fixed rates plus interest only payments for up to 5 years to help you budget for your rental property.
Where to start
To find out more about buying an investment property, pop into one of our Community First stores or call the Community First team on 1300 13 22 77. One of our Mortgage Specialists will guide you through the process and be able to answer all your questions.
¹ https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release
² https://www.realestate.com.au/news/property-investors-trickle-back-into-the-market/
³ https://sqmresearch.com.au/index_property.php
⁴ https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/first-home-owner-new-homes-grant
⁵ https://communityfirst.com.au/investor-home-loans
Credit eligibility criteria, terms and conditions, fees and charges apply.
Lenders' Mortgage Insurance applies for LVR over 80%.
This information is general advice only and does not take into account your objectives, financial situation or needs (your "personal circumstances"). Before deciding whether to buy any product you should consider your personal circumstances. You should read and consider the Terms and Conditions when deciding to use any product (terms and conditions, fees and charges may apply). Our product Conditions of Use are available at communityfirst.com.au
Buying a first property as an investor instead of an owner occupier can open up a world of choice – and bring some unexpected perks. Here’s what to weigh up.
Recent housing finance data from the Australian Bureau of Statistics¹ shows that lending to property investors is racing ahead, rising 12.1% over the year to October 2023, compared to 1.4% growth among owner occupied home loans.
According to REA Group², record low vacancy rates are one of the key reasons why investors are jumping back into the market. Low vacancy levels mean properties are unlikely to have difficulty attracting a tenant.
Add in rents that have soared 14% across Australia’s state capitals in 2023³, and it’s easy to see the appeal of property investing.
In fact, if you’re finding it hard to buy a first home in the area you’d like to live in, it can be worth thinking about making your purchase an investment property. It lets you take that first important step on the property ladder – and as we’ll see, it can be kinder on your cash flow than buying a place to live in.
Buying as an investor can open up affordable locations
Just like an owner occupied home, a well-located investment property can help you grow personal wealth. However, one of the pluses of buying an investment property is that the location you buy in doesn’t have to be shaped by personal needs such as proximity to work, friends or family.
As an investor you have the freedom to buy outside your local area, even interstate. This can open up more affordable locations better suited to your budget.
Your rental property is likely to grow in value over time, and when you are ready to buy an owner occupied home in the future, you may be able to tap into the equity you’ve built up in your rental property to help fund your next property purchase.
Earn rental income
As a property investor, you can expect to receive rent. That’s extra income that can go a long way towards paying off your investment loan.
You will need to pay ongoing costs of owning a property such as insurance and maintenance, but many of these costs can usually be claimed on tax.
It is always a good idea to speak to a tax professional to understand whether you could benefit from tax savings by investing in property. However, many property investors pocket ongoing tax savings year-after-year through ‘negative gearing’. This is where the costs of the property outweigh the rental income it generates, creating an annual loss that may be offset against other income including your wage and salary.
The tax savings of negative gearing not only provide extra cash to manage the ongoing property expenses, they can also make it surprisingly affordable to own an investment property.
Won’t I miss out on first home buyer benefits?
First home buyers may be eligible for support schemes such as the First Home Owner Grant (FHOG).
While these schemes can offer a valuable financial helping hand, they are not open to everyone. In NSW for example, the FHOG is worth a maximum of $10,000 but it only applies if you buy or build a brand new home⁴.
When you buy as an investor, you won’t be eligible for first home buyer support programs.
This is definitely something to weigh up, though you could find the annual tax savings of a rental property outweigh the one-off benefits that may be available to first home buyers.
Of course, when you buy as an investor, you will still need somewhere to live. This may be the family home, or renting a place in the suburb you want to live in. If you decide to rent, it’s worth doing the sums to be sure your cash flow can handle owning an investment property while you’re a tenant yourself.
Community First loans for investors
If you’re happy to make your first property an investment, Community First offers a variety of home loans to help you buy an investment property.
You can borrow up to 90% of the property value for new apartments and up to 95% of the property value for other types of dwellings (some suburb exclusions apply)⁵.
Our investment loans also offer competitive rates and flexible repayment options, with a choice of variable or fixed rates plus interest only payments for up to 5 years to help you budget for your rental property.
Where to start
To find out more about buying an investment property, pop into one of our Community First stores or call the Community First team on 1300 13 22 77. One of our Mortgage Specialists will guide you through the process and be able to answer all your questions.
¹ https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release
² https://www.realestate.com.au/news/property-investors-trickle-back-into-the-market/
³ https://sqmresearch.com.au/index_property.php
⁴ https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/first-home-owner-new-homes-grant
⁵ https://communityfirst.com.au/investor-home-loans
Credit eligibility criteria, terms and conditions, fees and charges apply.
Lenders' Mortgage Insurance applies for LVR over 80%.
This information is general advice only and does not take into account your objectives, financial situation or needs (your "personal circumstances"). Before deciding whether to buy any product you should consider your personal circumstances. You should read and consider the Terms and Conditions when deciding to use any product (terms and conditions, fees and charges may apply). Our product Conditions of Use are available at communityfirst.com.au
Community First Credit Union LimitedABN 80 087 649 938 | Operating as Community First Bank | AFSL and Australian credit licence 231204| BSB 512-170