Ex Rental Properties Prime for First Home Buyers

Ex Rental Properties Prime for First Home Buyers

25 Aug 2016 Professionals 0 Comment

One of the most significant trends in the Australian property market is the fact that many first home buyers are being locked out of the property market due to affordability issues.

This is particularly, the case in the boom property markets of Melbourne and Sydney where property prices have surged in recent years.

In such a tough climate, first home buyers can still get their foot in the property market through buying their first home as an investment rather than for owner occupier purposes.

Financially, this can be a very attractive option because the rent from the tenant will help to pay the mortgage while at the same time first home buyers will enjoy generous tax allowances such as negative gearing and depreciation that do not apply to owner occupier homes.

Professionals is finding a growing number of first home buyers in Sydney and Melbourne are now deciding to buy an investment property as their first home because of these reasons.

These astute first home buyers are also taking a broad brush approach to the location of their first investment property by focusing on more affordable property markets such as Brisbane, the Gold Coast, Adelaide and Perth.

For example, in Perth the median house price is around half that of Sydney and there are large number of suburbs where the median house price is less than $500,000 that are relatively close to the Perth CBD.

A good tip for first home buyers looking to buy an established home for investment purposes is to purchase an investment property in a well located area with high levels of rental properties.

Former rental properties offer opportunities for fast capital gain through cosmetic renovations.

These ‘ugly duckling’ ex rental properties traditionally have been neglected by their owners but offer excellent opportunities for astute investors.

This is particularly the case with self managed investment properties because many of these owners lack the discipline to conduct regular property inspections to ensure that necessary maintenance like replacing carpets or repainting internal walls occurs.

A typical investment property of this kind may be one that has been leased to a successive number of students with the owner trying to sell it while the property is still under lease.

Poorly presented former rental properties are severely penalised by property buyers even though a small investment can totally rejuvenate these homes such as new carpets and painting.

Astute first homebuyers should focus on well located areas that have an above average rate of rental properties which means that the chances of buying a poorly presented property are higher and the buyer has the knowledge that it is located in an area that historically achieves high levels of capital growth.

Investors should also realise that older properties still qualify for some tax benefits.

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CEO Shane Kempton first home buyers real estate tips for first home buyers

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