Recent reports show there is a growing trend in young persons taking out an investment loan rather
than the straight out first home loan. There is an advantage for these astute young persons on good incomes. If one buys a home with subdivision capabilities it generates capital growth faster if the right property is acquired. These persons either stay at home or rent while their investment first home rental pays towards their mortgage. Sure there are capital gains tax implications but the First Home Investor's intention is to build wealth and a property portfolio faster than buying a a new first home in a outer suburb which appreciate at a slower rate. The key to accelerating the growth is buying properties capable of future development- like a potential dual occupancy site in an established area. The house may be run down and not be as flashy as a new first home in an outer suburb, but these homes still rent. A town planning Application for a dual occupancy is lodged soon after the purchase and a town planning permit is valid for two to four years usually. In that time the property value with the planning and subdivision permit should increase providing equity for a construction loan. Lenders feel secure as the existing home is retained and in the event of a fire sale the lender is protected. Dual Occupancy are high yielding, purpose built investment property options in the Melbourne area that may allow the creation of two separate titles at a future date, allowing significant capital appreciation once the new titles are created. These properties have a high rental yield. The creation of future strata titles is always subject to the various councils planning regulations at the time of the application. If you already own a home or property and it has increased in value you could use that equity to purchase your first investment property. As the equity grows in this first investment, it can then be used to purchase a further property. These are the first steps to building your investment portfolio. Our advice is to retain the original home if it is in sound condition, do some cosmetic improvements to it and either hold or rent the original home depending on the financial situation. In my instance my first home was a dual occupancy development and I learnt a lot from that experience. The sale of the updated original home was used to buy a better home which could be developed into a boutique apartment while the new home shown above was sold to invest in another site. I did most of the renovations to the original home- like putting in a marble bathroom , updating the second one, took out the 60's kitchen and installed an off the shelf new kitchen, put in a deck and sun room by reusing doors and moving some walls, a new carport as the old one was dilapidated and painted the inside and sold it for many times higher than the price I paid for the original home and land! My reno costs was pretty tight on budget. The trick was finding good quality materials as we all strive to do and doing as much of the labouring as time allowed. If you are looking for a site capable of yielding a good return talk to us. We source Melbourne sites for developers and first home investors.