How to get into the property market now. Part 2

When we think and dream of buying our first property, we immediately think about our own home, where we would like to live and raise our family.

This makes sense. So we start looking for a place that will tick all the right boxes. It needs to be in the place where we want to live, close to our family, our job, our kids school, transport, the CBD, main roads and highways and so on. The ideal home also needs to be of a minimum size, number of bedrooms, bathrooms and carparks and meet other various considerations.

When we consider all these requirements in the current Australian real estate market, the most likely conclusion will be that the property we want will cost a large amount of money, and the first question we will need to answer is whether, as a first home buyer we will be able to afford the mortgage repayments. Most people agree that the ideal situation is to be able to purchase the home that we want, saving for the required deposit and being able to afford the resulting mortgage repayments.

However if you find it hard to qualify for the house you want, there is an alternative: To buy your fist property as an investment, meaning to buy it with the idea of renting it out to a tenant rather than moving in yourself. In the meantime you may continue living with your parents, or renting a home in the suburb that you like, close to your job, family or friends.

This is possible and has a number of benefits:

1. Enter the property market sooner rather than later and start increasing your real estate equity as the market grows over time.
2. You will be free to choose the type of property and location to suit your budget, income and available savings.
3. You might be entitled to deduct the mortgage interest repayments from your taxable income and so potentially save some tax, following advice from your accountant.
4. Receive an additional source of rental income which will help you with your accommodation expenses.
5. In the current market, renting will likely be cheaper than mortgage repayments (depending on the loan amount borrowed).

In Part 1 we discussed the main costs to purchasing a property and how to minimise them. We will continue this discussion in Part 3, talking about how to buy our property not using money of our own.

• SHARE