First time buyer questions

Hi All,

I'm looking to make the step from renting, to buying my first property. I would like it to be an investment, but I would also like to claim the FHOG before the end of June (unless it's extended). I figure now is a good time to buy, due to the low interest rates and some bargain properties popping up. As I'm wanting to claim the FHOG, I'll be living in the property, and the plan is to rent out the other rooms (cash in hand) to help out with the mortgage payments (to pay off the loan as quickly as I can). After a year I'd look at using the equity to help me borrow for a 2nd investment property.

Because I'll be living in the property, it has to be within travelling distance to my work (on the north side of Brisbane). I've looked at a few options which I've listed below. I'd really appreciate some advice and opinions on these (and any other) options!

A few points about my situation which may help:

• I'm 22 years old
• Eligible for FHOG
• Would prefer a house to a unit (I guess I'm greedy as I will be living in it myself. Would a unit provide better return on investment?)
• Also prefer not to live on a main road (what are the advantages/disadvantages in terms of return?)
• I'm not very handy (e.g. I wouldn't be able to renovate a place myself – I'd have to pay someone to do it)
• Looking to use this purchase as a stepping stone to further investment properties in future
• Happy to share the house (i.e. rent out the spare rooms) as I'm sharing at present (and paying rent!)
• Looking to spend around $350,000

OPTION 1: 3 bedroom house in Keperra
Pros:

• Close to city (8km)
• On train line (Grovely, Keperra stations)
• Close to shops (Great Western Super Centre)

Cons:

• For the price, houses here would need renovation
• I don't really like the area to live in myself (I know the area very well, and there are a lot of housing commission houses, rentals and generally undesirable people around)

OPTION 2: 3 bedroom house somewhere further out (Strathpine, Bracken Ridge etc)
Pros:

• Can get a house in better repair for the same amount of money (dated, but clean)
• Would have a bigger block of land (yard) for the same price as a small block closer to the city

Cons:

• May not have the same return as somewhere closer to city???

OPTION 3: Build/Buy a brand new 3 bedroom house further north – somewhere like North Lakes or Freshwater
Pros:

• Can claim $21,000 FHOG (instead of $14k for existing house)
• New house won't need any renovation
• Close to all the North Lakes infrastructure – huge shopping centre, schools, parks etc

Cons:

• Possibly lower returns???
• May be harder to rent out, as it's further from the city?

I know some of those points seem more emotional than purely based on figures, but that's because I will be living there myself for at least a year. I REALLY appreciate any advice or comments people can provide

Thanks!