First Home Investor

Recent reports show there is a growing trend in young persons taking out an investment loan rather than the straight out first home loan. There is an advantage for these astute young persons on good incomes. If one buys a home with subdivision capabilities it generates capital growth faster if the right property is acquired.

These persons either stay at home or rent while their investment first home rental pays towards their mortgage. Sure there are capital gains tax implications but the First Home Investor’s intention is to build wealth and a property portfolio faster than buying a a new first home in a outer suburb which appreciate at a slower rate.

The key to accelerating the growth is buying properties capable of future development- like a potential dual occupancy site in an established area. The house may be run down and not be as flashy as a new first home in an outer suburb, but these homes still rent.. A town planning Application for a dual occupancy is lodged soon after the purchase and a town planning permit is valid for two to four years usually.. In that time the property value with the planning and subdivision permit should increase providing equity for a construction loan. Lenders feel secure as the existing home is retained and in the event of a fire sale the lender is protected.

Our advice is to retain the original home, do some cosmetic improvements to it and either hold and rent the original home if the financial position allows or sell to release cash which reduces the debt.

In my instance my first home was a dual occupancy development.