The first property you buy doesn’t have to be the one you live in. Starting out with an investment property is one way to get a foothold in the property market and would especially suit the following scenarios.

You can’t afford to buy in your favourite suburb

You might want to live near beaches or cafes or close to work so you don’t have to waste time commuting. In which case it may be more cost-effective to rent where you want to live and buy an investment property in a more affordable area. There are some investors who have never lived in a property they own, choosing instead to rent in desirable locations they would never be in a position to buy.

You haven’t decided what kind of home you’d like to buy

You may not yet have a family or you might be expecting to change job locations, so you are not sure what home would suit your lifestyle. You can still buy into the property market but you can focus on what type of property would attract tenants rather than whether it would suit you.

You don’t want to tie up your cash flow

Your tenant pays down your home loan while you only have to pay rent – meanwhile your investment property grows in value. You might even be living with your parents or house-sharing to keep down the cost.

You can claim a range of tax deductible expenses through your investment property, which may help reduce your tax bills and improve your cash flow. When you live in a home, the debt is not tax deductible.

As long as the property you buy experiences capital growth, you may be able to draw upon the equity to buy a home or expand your property portfolio down the track.

DISCUSS YOUR STRATEGY WITH US

Renter-investors should have a clear strategy in mind as to what they are going to do with their investment property, as this will impact their lending and finance choices.

Consider issues like how long you want to hold onto the property, how to best manage cash flow and whether you plan to draw on the equity of your investment to fund another purchase. By using a mortgage broker you can have access to a large range of lenders and may save thousands by having suitable lending and finance structure in place.

Regardless of your circumstance, it’s important to seek our advice and that of a tax accountant to help you get the most out of your investment strategy.

Statement by Glenn Stevens, Governor: Monetary Policy DecisionAt its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.

Growth in the global economy is continuing at a moderate pace. China's growth remains generally in line with policymakers' objectives, with weakening property markets a challenge in the near term. Commodity prices in historical terms remain high, but some of those important to Australia have declined this year.

Financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain very low. Volatility in many financial prices is currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest rates or other adverse event over the period ahead.

In Australia, the most recent survey data indicate gradually improving business conditions and some recovery in household sentiment after a weaker period around mid year, suggesting moderate growth in the economy is occurring. Resources sector investment spending is starting to decline significantly. Investment intentions in some other sectors continue to improve, though these areas of capital spending are expected to see only moderate growth in the near term. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend over the year ahead.

The recorded rate of unemployment has increased recently, despite some improvement in most other indicators for the labour market this year. The Bank's assessment remains that the labour market has a degree of spare capacity and that it will probably be some time yet before unemployment declines consistently. Growth in wages has declined noticeably and is expected to remain relatively modest over the period ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate.

Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over recent months as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. The increase in dwelling prices continues. The exchange rate, on the other hand, remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.

Looking ahead, continued accommodative monetary policy should provide support to demand and help growth to strengthen over time. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.

In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.