A quick hypothetical scenario.
I am currently renting with my partner for 500 per fortnight in Spearwood in Perth.
We would both like to start investing in our future.
Living in WA as a home buyer you get 3000 dollars FHOG, and a 2000 dollar grant for things like conveyancing if the property is under 400k.
Being in Defence I am eligible for a scheme called HPAS, a 16 k taxed one off payment to buy a house with, as well as a scheme called DHOAS, which for me is a 225 dollar per month payment towards a home loan.
I am in Perth until early 2019.
Plan A) Find and buy a property in WA for around 400k in a good area close to say Curtin Uni or similar. Live in it until 2019 and then when I leave transition to IP.
I would try for an interest only loan with an offset, or if not possible pay the minimum Interested and Principle and use an offset account to reduce the interest component, while maintaining cash that can be used for the deposit on a new IP once I post out of WA.
My understanding is that by doing this I can take advantage of having the loan that is able to be negatively geared while ensuring I have the capital available to take the next step (IP or PPOR in next posting), and basically try and was rinse repeat this process to acquire more properties.
+ No Stamp Duty
+ Defence Benefits allowing me to gain more equity quicker
+ FHOG and the conveyancing payments
- Perth Market seems to be sluggish/going backwards.
- It costs more than renting, but not by very much.
- The extra costs of rates and water rates.
- LMI.
Per fortnight this option would cost 820 at a 4.50 percent interest rate, or 720 taking into account the Defence monthly payment. So 220 more per fortnight than I am currently paying.
Option B.
Save up more money until I have around 20 percent, and buy an investment property somewhere else (Adelaide or Brisbane) that will hopefully experience capital growth.
+ Not too costly assuming 80 percent occupancy.
+ More choice of where to buy
- Stamp duty
- no FHOG, no HPAS payment
I know that this decision could have massive implications on my wealth creating ability over the next 10 - 15 years, and I'd appreciate some opinions from people that have already walked these paths.
I am currently renting with my partner for 500 per fortnight in Spearwood in Perth.
We would both like to start investing in our future.
Living in WA as a home buyer you get 3000 dollars FHOG, and a 2000 dollar grant for things like conveyancing if the property is under 400k.
Being in Defence I am eligible for a scheme called HPAS, a 16 k taxed one off payment to buy a house with, as well as a scheme called DHOAS, which for me is a 225 dollar per month payment towards a home loan.
I am in Perth until early 2019.
Plan A) Find and buy a property in WA for around 400k in a good area close to say Curtin Uni or similar. Live in it until 2019 and then when I leave transition to IP.
I would try for an interest only loan with an offset, or if not possible pay the minimum Interested and Principle and use an offset account to reduce the interest component, while maintaining cash that can be used for the deposit on a new IP once I post out of WA.
My understanding is that by doing this I can take advantage of having the loan that is able to be negatively geared while ensuring I have the capital available to take the next step (IP or PPOR in next posting), and basically try and was rinse repeat this process to acquire more properties.
+ No Stamp Duty
+ Defence Benefits allowing me to gain more equity quicker
+ FHOG and the conveyancing payments
- Perth Market seems to be sluggish/going backwards.
- It costs more than renting, but not by very much.
- The extra costs of rates and water rates.
- LMI.
Per fortnight this option would cost 820 at a 4.50 percent interest rate, or 720 taking into account the Defence monthly payment. So 220 more per fortnight than I am currently paying.
Option B.
Save up more money until I have around 20 percent, and buy an investment property somewhere else (Adelaide or Brisbane) that will hopefully experience capital growth.
+ Not too costly assuming 80 percent occupancy.
+ More choice of where to buy
- Stamp duty
- no FHOG, no HPAS payment
I know that this decision could have massive implications on my wealth creating ability over the next 10 - 15 years, and I'd appreciate some opinions from people that have already walked these paths.