Many people today, especially first home buyers, are thinking of taking this route because it can be an easier way to get onto the property ladder.

But is it really financially practical to have your first home rented out? Let’s look at some reasons why it might be a better option to invest in a property first rather than purchasing and occupying.

Rental income
If you manage to positively gear with your investment property then you can use the rental income to pay for the loan repayments. Additionally, you have the option to choose an interest-only loan where, for an agreed period of time, you only pay interest and don't repay principal. This will lower the repayments during this period, so you can more easily service the loan. 

Tax benefits
Another benefit when investing in a property compared to living in it is the ability to claim tax benefits such as depreciation allowances. Negative gearing could also help you offset some of the property costs where you can claim deductions for the amount of rental expenses against your income.

Lifestyle flexibility
Rentvesting is a popular trend among people who travel a lot. Turning your first home into an investment property makes sense if you live a jet set lifestyle or if your work requires you to move a lot. You will have the opportunity to travel or change address as you like and at the same time build your wealth and improve your portfolio.

Lower expenses
If you find that renting is more affordable than owning a house, then buying a home and turning it to a rental property can be a more practical decision. You have someone to partially cover your expenses such as the mortgage repayments and utility bills of the house. But if you choose to live in your house, you can rent out a spare room to lessen the expenses. Keep in mind that there will still be taxes involved.

Some reminders
While an investment property can help you to ultimately leverage into a new home, there are still some responsibilities to bear such as finding and managing tenants, collecting rent, handling repair and maintenance, and other general responsibilities of being a landlord.