1st property - occupy or rent?



From: Todd Dick

What a great forum. I have a quick question.

I currently do not own either my own home or an IP. I am currently trying to decide, what is the best way forward: 1) buying my first place as an owner occupier residence to live in, or 2) buying my first place as an IP and continue renting?

My strategy is – I want to have an IP in roughly 2-3 years. I am curious, which way forward would be better – exploring number 1 or 2.

Some things I have been thinking about are:
1a) If I buy a place as an owner occupier – I have the ability to apply for the government 1st home owner grant of $14,000. If I live in and sell the place a few years later (to buy an IP) I may be able to walk away with a small profit if growth in the property works in my favour (and given I do not have to pay capital gains tax on any profit).

2a) If I buy the place as an IP – I have the opportunity of using tax advantages including negative gearing, writing off interest on the loan, (I would be probably taking out an IO – for the IP) purchase costs, etc, and after 2-3 years, I still have an IP (or maybe 2-3 by this stage). The disadvantage is that I will continually have to pay rent (money going into someone else’s pocket) and do not qualify for the $14,000 grant as I would in number 1.

At the end of 2-3 years, can someone tell me what they think which one is the better approach?

Much Thanks,
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Reply: 1
From: Rae B


Another scenario to your 1a) is to buy your house and then 12-18mths later, have it revalued and use the equity in it to buy your IPs. (Dependent on your disposable monthly income.)

Something else you need to look at is: are you able to rent cheaper than net renting your IP out(out of pocket expenses for the month.

Hope this helps exercise your brain.

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Reply: 1.1
From: Sergey Golovin


Please have look at this link; it is from Apprentice Millionaire Guide (first on the list on very same forum)


Second - have look at posts of the last month. Wealth of information is out there.

And finally - buy your own place using $14K.

If you are in NSW and brand new property is under $200K. you will receive 100% stamp duty exemption.

Further more 5% deposit would be $10K. + $2K. all other expenses (bank fees, conveyancing, etc.) = $12K all up. You have to put $12K. on table and you will get back $14K. You are $2K ahead, just to pay relocation cost and new dishwasher or washing machine. Remember it is no stamp duty if property is under $200K in NSW.

In Canberra (ACT) the cut-off point for the First Home Buyers Concession is 139,900 (Land & Building) or 70,000 for vacant land.

Obviously you will get further concessions on stamp duty as well but not as good. The max you can go (with concessions in NSW) is up to $300K.

Once you settled with your own home, use money, which you did put aside for your IP to buy that IP.

Please let us know if you have found some other way of doing those things. Interesting to know what else is out there.

Good luck.

Serge G.
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