First pass at an investment strategy - comments welcome!

Hey Travel,

I think Bigtone is just cleverly combining the 2 sayings "it's not Rocket science" and "it's not brain surgery" to further drive home the meaning;)

I actually get a kick out o it every time I read it

That was my assumption too.
Very clever :)
So, as a result of this goal, I have drafted this (long-winded and over-wrought) strategy of:
1. Saving a deposit
2. Using this deposit to buy a relatively affordable 2-3 bedroom property (likely location: Melbourne & surrounds) as a “first home” and living in it for a short while (at least six months)
3. Investigating ways to use this property as equity/leverage to buy our “ideal home”, which could include:
a. Living in the house until we have saved a full 20% deposit in an offset account
b. (after at least six months) moving out of the house into a rental, converting it to an investment property, and using the financial structure/income to accelerate our second deposit
4. Deciding what to do with the house once a second PPOR is purchased (either sell for the CGs, or keep as an IP, with a view to expanding our portfolio).As noted by PT_Bear though, these accounts and benefits come with a number of constraints, including having to use the whole amount of our savings as a deposit (or surrender it to your super) and having to live in the home for a minimum of six months after purchase.

This is a reasonable strategy, I would classify it as fairly conservative. A lot of people approach property aquisition in this manner. A more aggressive strategy would be to put off home ownership and continue to pump money into investments. Home ownership can actually be a hinderance to building a property portfolio.

Using the FHOG however is quite common and can be a nice kick start. If the property will become an IP in the future, make sure the finance is structured to optimising it for investment purposes right from the start. Essentially an interest only loan with an offset account.

As far as I can see, none of this is inconsistent with our goals, but do you guys agree? Additionally, is there anything about this savings strategy (FHSAs & state government subsidies) that would constrain my ability to convert the property to an IP after a year or two if I wanted to?

As long as you abide by the terms of the FHOG you should be fine. Essentially you need to move in within 12 months of aquisition and stay there for at least 6 months.

I have been thinking a lot about whether now is the right time to start seeking professional advice. I have a lot of questions to ask, but as noted above, I have only just started saving a deposit! In your collective opinion, is it too early to start forking out money on advice? I am still very unsure who the best person to speak to would be at this early stage: Is it broker, or should I be looking more toward a financial planner or accountant?

My suggestion of seeing a broker is based on the fact that you'll need finance in your strategy. Financial planners and accountants aren't qualified to give you advice on this. By visiting a broker you can determine what fiance you will qualify for and how this can fit into your strategy. Financial planners and accountants can give you some advice on your strategy and tax advice, although I'd suggest the right broker will be better on property strategy as well.
Have you read any of Jan Somer's books?? I am in the middle of reading one of her last ones Creating More Wealth from Property Investing. It's an older book but the principals of real estate always stay the same.
Have you read any of Jan Somer's books?? I am in the middle of reading one of her last ones Creating More Wealth from Property Investing. It's an older book but the principals of real estate always stay the same.

Hi Emily,

I haven't started it yet, but it is next-in-line on my reading list. I'm currently getting through Steve McKnight's From 0 to 130 Properties in 3.5 Years, which is great as well.

Thanks again everyone for your assistance. At this stage, we're going to go ahead and begin saving a deposit using 2 x First Home Saver Accounts, as this seems to be the best way to maximise our savings. It will take at least another three years to get the deposit to ~20% LVR, so in the meantime I will be following your collective advice and doing lots of reading and research. That way, when we're ready to begin discussions with a mortgage broker in a couple of years, we'll be as informed as possible.

Very excited about the road ahead. :)
Just curious as to why you want to leave Canberra?

There are so many opportunities in Canberra to achieve a much higher income than $65k - for both you and your wife (depending on what you do of course and your skill level). Also a great place to raise a family with the most family friendly employers in the country.

Personally I would be staying and trying to get a couple of quick promotions (prior to Sept).

HIgher incomes give you the ability to save quicker - you can then buy anywhere in the country.
Just curious as to why you want to leave Canberra?

Hi Nemo,

I completely agree that increasing income is a core part of a good investment strategy, and that Canberra presents lots of opportunities for this in the long term (all aboard the APS gravy train! ;) ). In this case though, our decision is primarily a personal one (as nice as it would be if everything was a purely economic decision!)

Although I agree that Canberra is a great city for a family, we never really intended to stay here for the long-term. My wife has also had a few health problems recently, which has emphasised to us that Canberra is a bit too far away from our families (Tasmania and rural Victoria) and long-term friends (Melbourne and surrounds). We're also both children of the coast, so have always planned to raise a family near the beach :)

Despite the move though, we'll definitely both be looking for opportunities to increase our PAYG income.

PS I also think the promotion capacity in Canberra is set for quite a significant drop-off in the short term, given the current fiscal situation and near-certainty of a change in government. Given this, I think it's possible that moving to Vic at this stage could actually increase my chances of getting a pay rise!