I’m not very experienced in the property market but I was just wondering, now that the boom has finished and we are all sitting with these substantial house prices how does one initially get into the market.
Would it be better to look for something further out from the city or is there still deals out there.
I’ve been reading a lot on the subject lately from the pros and one thing I noticed is that they all paid under a hundred thousand for their first investments.
I don’t have a mortgage yet but I was wondering if the government grant for first home owners is applicable if you plan to rent it out.
HenryMortgage HunterParticipant@mortgage-hunterJoin Date: 2003Post Count: 3,781
Do some reading on the FHOG – there is some info on my website and links to your state’s websites. Do a search here as well. Plenty of posts already.
Basically you can use the FHOG for a property provided you ocupy it within the first 12 months and occupy it for a period of more than 6 months.
Your amount you can spend is limited only by your deposit and your income. Use a mortgage calculator or contact a broker to determine your capacity.
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.PurpleKissParticipant@purplekissJoin Date: 2003Post Count: 580
The first home owners grant isn’t applicable if you plan to rent it out, it’s to get you into your own home. Check the grant conditions, someone on here could probably clarify but I believe you have to live in the house for either 6 or 12 months, not sure which.
Secondly, from my experience and others would disagree, but I feel it’s best to get into the market with a cheaper home first, build some equity and then move up. At least you can still afford to live life while paying the mortgage that one. If you start too big then your mortgage repayments will eat into your wages and you may not be able to live the lifestyle you want ie: go out etc.
Once you’ve built up some equity in your first home, then you can decide whether to sell and upgrade or whether to use the equity for investment properties etc.
Consider your goals, wht do you want to achieve and then look at how you can go about getting there.
Thanks for the help.kpMember@kpJoin Date: 2004Post Count: 509
Great advise PK,
Too many first home buyers want all the bells and whistles when they buy their first house.
Its gotta be a 4 bed 2 bath NEW house with a mortgage to match which as you suggested, keeps you poor just trying to keep up with the repayments.
The first property I bought to live in was so bad, that the bank would not lend on it not because I couldn’t afford the repayments, but because they deemed that I did not have enough savings to make it fit for human habitation ( renovation needed)
The one I bought in 2001 to live in was also so bad, that we got proior possession so we could strip the floorcovering just to get rid of the SMELL coming from the carpet.
We ended up using disinfectant on the concrete floor before replacing the carpets.
But this property had heaps of potential and has netted us a huge gain.
So short term sacrifice pays off in the end.
But to answer your question Henry, just because the property frenzy of the last few years is over, does not mean that there are still not good property buys out there.
Its not possible to advise that you limit your first buy to under $100k, it has to depend on the market you are looking at and on your budget ( ie.. income and savings etc.)
So maybe if you provided more info. you might get a more informed reply.
If your fisrt property purchase is for investment purposes, when you finally buy you first home to live in, will you still be able to get the first home owners grant?jgiannakisMember@jgiannakisJoin Date: 2004Post Count: 1
Cannot claim FHOG after you bought an investment property. When I got married, my wife already had an investment property, we purchased our own home and we weren’t eligible for the First home owners grant.
If you are buying your first home will you and your partner be given the FHOG or is it a grant that is only applicable per house?melbearMember@melbearJoin Date: 2003Post Count: 2,429
Henry, check out mortgage hunter’s website for the info on the FHOG for your state.
If you buy a house after 2000 (ish, can’t remember exact date, but know that it’s not really relevant as 2004 is definitely after) and do not ever live in it, when you come to purchase a home that you will live in, you are eligible for FHOG. In some (maybe all?) states you will not be eligible for the stamp duty savings though.
Melkay henryMember@kay-henryJoin Date: 2003Post Count: 2,737
I bet many of us on this board bought our first IP’s for less than 100k- I know I did, but the property market was very different then. The thing about buying a cheaper property is there is more room for contingencies. If your income changes or you decide to do other things, a 100k property won’t bog you down forever. Having said that, the location of your IP- at 100k, might mean you get cheaper rents… I have this idea that the cheaper locations have cheaper rents, with the exception of mining places, or other isolated towns where there is a bunch of professionals – teachers and nurses- who are in the place for a little while, and never buy a place- this was the case when I was living in the outback.
I work it out on location- that’s my first priority, and then yield. No point paying 100k for a property that will only net you $80 a week- that’s only a 4% yield- you can do much much better than that. Some will work on yield and then location- depends on who you talk to.