Can your first home be an investment property?

Housing affordability is a big topic - particularly if you're trying to break into the market.

When you've put together enough savings for a home loan, your next step is going to be deciding what kind of real estate to buy. Even though the age-old dream of living in your own home is still alive and kicking for many, a lot of savvy buyers are taking out their first ever mortgage to buy an investment property.

But how does this work?

Could young people emerge as the 'rentvestor' generation?

What many people decide when conducting their home loan calculations is to purchase real estate outside capital cities, where housing may be more affordable. From there, they might rent in their preferred location. Colloquially dubbed 'rentvestors', this group has increased in popularity over the last few years1.

What are the benefits?

To start with, purchasing an investment property may mean you have the potential for positive cash flow, which could potentially pay part or all of the mortgage for you while the real estate (ideally) grows in value. Considering the vast majority of the regional real estate in Victoria, NSW and Queensland sells at a profit2, this could be a useful move for first home buyers looking at alternatives to owner-occupation.

On top of this, first home buyers could get the best of both worlds: home ownership and the ability to live where they really want to. The most desired central city locations might often be the most expensive, so this offers a way in without sacrificing climbing the property ladder.

How do you make it work?

Rental growth can at times be slow, which could mean some might struggle to get a profitable investment property in terms of rental income. On top of this, capital growth may not be a certainty, depending on where you buy. You might want to contemplate seeking some professional advice before making any major decisions.

Property investment can be a tricky prospect. However, with the help of an IMB Bank Home Loan Specialist, it could be made a bit easier. With a wide selection of home loans for investors and owner occupiers alike, the team at IMB can cater to your specific needs. Get in touch to find out what we can do for you.

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1 . LJ Hooker

2 . CoreLogic

Important Information

This article has been prepared by IMB Bank and contains general information only. It is not intended to be relied on as advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, financial, taxation or other professional advice before you make any decisions about your business. Consider the relevant Terms and Conditions or Product Disclosure Statement and Target Market Determination available here before deciding whether to acquire any products or services offered by IMB Bank. Lending criteria, terms and conditions, fees and charges apply to IMB loan products.

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