Don't Always Use Your First Home Owners Grant On Your First Property

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Don't Always Use Your First Home Owners Grant On Your First Property

Right, today, interesting blog today, about why the first home owner’s grant can sometimes be a trap for a would-be property investor.
Now, it’s very tempting, isn’t it, when you haven’t yet got your first property, and the government’s saying, ooh buy a property here locally, where you live and I’ll give you seven grand, in some cases, even $20,000, and then stamp duty concessions on top of that. It can be quite attractive, you know, $30,000, $40,000 worth of benefits, when you’re trying to get into your first property. So, you’re going, “Yeah, I’m going to do that!”
Problem is this: every capital city in Australia is in a different stage of the market cycle.
Now, the market cycle follows a really simple process. You’ve got a flat period where supply equals demand, and then we’ve got a boom. Most booms last about 3-4 years, and then we have a peak, which is where prices top out, and then we have a little correction where the market’s oversupplied, they stop producing more, the oversupply comes out on the market. They have to drop the price to sell it all and then it goes back to a flat period again.
Now, every capital city in Australia is in a different stage of that cycle. So, here’s the thing… if you’re going to use your first home owner’s grant, you have to buy that property where you live. So, you might go and get into that property, but if you’re in the wrong market, you might be sitting there for years before you’re able to get another property.
Whereas, the secret to property investing is to buy where it’s booming. House goes up in value, grab the equity, buy again. Grab the equity, buy again. When you get that right, you very quickly grow a portfolio. And you hear about these people growing 10 properties in 10 years. Well guess what? You get that right, you can do even better than that.
So, here’s the thing: first home owner’s grant can be a trap. Some people are so desperate to get into their first property that they go and buy locally using the grant, but then they come to a grinding halt because they bought at the end of the last boom cycle and then they go into the cold winter that is the flat period.
Here’s the good news though: you can actually buy the investment property first and then use your first home owner’s grant on subsequent purchases later if you buy locally. So, you wait for the market to come round to where you live and then buy your property locally using your first home owners grant. Live in it for the minimum amount of time and then move out and rent it out again. And we’ll talk in another video about why you’re better of renting and owning investment properties than living in your own property that you own.
That’s it from me today. Hope you enjoyed it.
Cheers.

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