Young couple buying investment propertyBuying a property is far from an uncommon aspiration for many Australians. It is, however, a disappointingly unrealistic dream for younger generations who compete to command a salary with which they can afford an Australian property.

If you’re one of the masses in this situation and are considering staying at home with your parents while you pull your savings together, is it worth continuing to do so once you’ve acquired your property and turning it into an investment?

Should your first home be an investment property?

Find out whether or not joining the increasing number of Australian rentvestors is a good move for you.

Rentvesting is a quickly growing trend

Saving money for a property deposit and owning bricks and mortar of your own is a common aspiration in Australia, no doubt helped along by the insane levels of growth within its capital cities.

Growth like this isn’t always good, however. Although it benefits those who’ve got their hands on a property, it makes attaining a first home significantly harder for those looking to get their foot in the door of the real estate market.

When the property investment in Australia exceeds $13 billion, is there more sense in staying at home with your parents and renting out your first home as an investment?

Boosted income is always a plus

Rentvestors often use their rental value to pay-off their mortgage balance each month. Hike the rate a little, however, and you’ve got a real investment property on your hands.

Whether you use this as spare spending money or put it towards your next deposit is up to you, but you need to make the right call on how much you charge your tenants.

Aim too high and no-one will be interested, aim too low and you’re probably not going to cover your own overheads each month. If you’re unsure of what your property is worth, an experienced real estate agent will be able to help you to settle on the right number.

Bear tax deductions in mind

In a bid to keep rental property upkeep affordable for investors, the Australian government has introduced several tax deductions to help you make the most of your money.

Some of the key outgoings that you can claim as an expense include:

  • Commission and agent fees
  • Land tax
  • Any repairs or general maintenance
  • Essential pest control
  • Water and council rates
  • Advertising costs for attracting new tenants

None of these are available to your typical householder, so it’s wise to make the most of them if you can.

What should you look for in your first investment property?

Although areas in rural Australia might not have the best gains on paper, the Australian Securities and Investments Commission asserts that they offer top-level rental yields. For this reason, these are usually a safe bet for first-time investors.

Within your state’s cities, you shouldn’t focus on the type of property you’re most attracted to. To ensure the highest rental yield, you’ll want to base your purchase around the type of property your audience will be most interested in.

Proximity to schools, transport links and local bars and restaurants are always good benchmark factors to consider during your property hunt.

 

The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.