Buying property is one of the biggest financial decisions you'll make. A common question, especially for first home buyers, is whether to build a home to live in now, or buy an investment property first and "rentvest" for a while.

Both can work. They suit different goals, risk appetites and stages of life. I'm a builder, not a financial adviser, so treat this as a framework for the conversation you should have with a licensed financial adviser and your accountant, not as advice.

Option 1: Build a home to live in

The upside

  • Modern, efficient home. New homes in most states, including Queensland, must meet 7 stars under NCC 2022, so running costs should be lower than most older homes.
  • Your choices. You pick the layout, finishes and fixtures within your budget.
  • Low early maintenance. Nothing worn out from a previous owner.
  • Protection. In Queensland you have a 12-month defects period from practical completion under the standard QBCC contract, plus QBCC home warranty cover for structural and non-structural defects.
  • Queensland help for first home buyers on new homes. The First Home Owner Grant is $30,000 for eligible new homes valued under $750,000 (home and land), and from 1 May 2025 eligible first home buyers pay no transfer duty on a new home or on vacant land to build on. Check the current rules with the Queensland Revenue Office before you sign anything.
  • Main residence CGT exemption. Your home is generally exempt from capital gains tax when you sell. There's no fixed minimum period you must live there, but conditions apply. See the ATO's main residence page.

The downside

  • Higher upfront price. New homes often cost more than comparable established homes.
  • Waiting time. Expect months between signing and moving in, and you may be paying rent and a construction loan at the same time.
  • Delays. Weather, trade shortages and supply problems can stretch the build.
  • Extra costs. Site costs, variations and upgrades can push the price well past the base quote.
  • You need to stay across it. Checking progress and quality takes time and some knowledge.
  • Construction finance. Construction loans are paid out in progress stages and usually convert to a standard home loan at completion.

Option 2: Buy an investment property first

The upside

  • Income and growth. Rent covers part of the costs, and you may get capital growth over time.
  • Tax deductions. Interest, rates, insurance, repairs, management fees and depreciation can usually be claimed.
  • Negative gearing. If deductible costs exceed rent, the loss can reduce your other taxable income.
  • Diversification. Property can balance other investments like shares or super.

The downside

  • No main residence exemption. You'll generally pay capital gains tax when you sell, though a discount may apply if you've held it for more than 12 months.
  • Ongoing costs. Council rates, water, insurance, maintenance, property management fees and possibly land tax.
  • Tenants and vacancies. Arrears, damage and empty weeks all cost money.
  • Market risk. Values can fall as well as rise, and interest rate changes hit your cash flow.
  • Hard to sell quickly. Selling takes time and costs agent fees and marketing.
  • Grants and concessions. The first home grant and duty concessions are aimed at people who will live in the home, so buying an investment first may mean you miss out.
  • Negative gearing relies on growth. You're making a loss each year in the hope the property grows enough in value to more than cover it. If growth stalls, you're just losing money.

Comparing the two

Upfront costs

Both involve a deposit, legal fees and inspections. An investment property usually involves transfer duty. A new home for an eligible Queensland first home buyer may not.

Holding costs

If you build, you may carry rent plus loan repayments during construction. If you invest, you carry the gap between rent and costs, which you need to fund from your income.

Tax

Your own home: no deductions, but generally no CGT on sale. Investment: deductions now, CGT later.

Effort

Building means managing a build for 6 to 18 months. Investing means managing tenants and maintenance for years, or paying someone to do it.

Lifestyle

Building gives you a home that suits you. Rentvesting lets you rent where you want to live while owning where you can afford.

What about shares or ETFs?

Some people compare property with exchange-traded funds. ETFs are cheaper to buy and sell, can be bought in small amounts and are easy to diversify, but you can't live in them and lenders won't let you borrow as heavily against them. Past returns change constantly, so I won't quote any here. Your adviser can compare the options against your situation.

Questions to take to your adviser

  • What can I borrow, and what deposit do I need for each option?
  • Am I eligible for the First Home Owner Grant or transfer duty concessions, and would buying an investment first affect that?
  • What would my cash flow look like during a build, including rent?
  • What are the tax effects of each option for my income?
  • What buffer should I hold for interest rate rises, vacancies or build delays?
  • What's my plan in 5 and 10 years?

If you decide to build

Go in with your eyes open. Get a fixed-price contract with clear inclusions, budget a contingency for site costs and variations, and check the work at each stage. My C1 Before Buying Land checklist is free and a good place to start.

Further reading

Step-by-Step Guide to Residential Building in AustraliaThis guide provides a detailed overview of the residential building process in Australia, highlighting key stages from the initial deposit to the final handover. It offers insights into contract stage claims and the elements within each stage.Modular Construction: Changing Building Amid High DemandDespite regulatory hurdles and logistical challenges, modular construction is gaining popularity for its ability to deliver high-quality, eco-friendly homes quickly. Successful projects highlight its potential to meet housing needs while maintaining high standards.Understanding Off-Gassing in Home ConstructionOff-gassing releases VOCs from building materials and household products, impacting indoor air quality and health. Common sources include paints, finishes, and furniture. Health effects range from headaches to serious conditions like cancer.