QLD 400-450k property in Cairns Norther Beaches (PPOR)

Hi community,

I've been renting in Cairns Northern beaches with my partner and our dog for a few years. Due to recent opportunities we're probably going to stay here for 4++ years, but not longer than 7 I feel. This number may change again as we do like the place and lifestyle (just missing the convenience and food of the big city) but would like to prevent my career and work from getting stale (so far I've been lucky to be able to keep this up here).

We normally would be happy renting but due to the influx of people rentals have become a lot more competitive especially with a dog. Furthermore, our agent has started making inspections more onerous and I have a feeling it is because we're paying way below current market rent (we've lived here all our time in Cairns) and they may or may not be planning to make us leave voluntarily (just a guess). Looking at the market right now, it looks like there are only a handful of pet friendly rentals available and some are 20% higher than what we are currently paying.

We have an IP in Brisbane and we're planning to do a bit of debt restructuring+IO switching to take advantage of IP deductions and I estimate that it should overall save us about 13k a year (not factoring in additional expenses for rates, insurance and maintenance yet).

Is 400-450k a reasonable price for something 400-500sqm and 4-4.5 rooms in size given the location? Smithfield to Kewarra-ish but also open to Redlynch and other non-flood areas. Is this a good decision given the current climate?

We're not planning to buy for capital gains (but it would help if it was at least not inferior to renting)
No issues buying at the above budget like pretty much in the next couple of months but I'm wondering if this is a wise decision given that we also don't in plan to stay here long term (or that we're not sure about it).

Thank you for whatever input you may have!

 

You would have to compare the returns of the cairns place plus the cost of renting, versus what you would buy with it instead, less the cairns rent.

 

I'm not sure what you mean. Do you mean, capital gains from Cairns PPOR + cost of renting vs what I would buy/invest i.e opportunity cost (its was my emergency fund actually) after decuting Cairns rent?

I'm guessing its a typo and you meant capital gains + cost of owning.

So far I've worked out that from what I know about the cost of owning (rates, insurance + 1% for maintenance), would put us ahead by about 1% and considering we have no capital gains.

Also, I'm not sure if we should plan for capital losses given that there is no theoretical shortage of future supply. Established homes always sell for less than asking because they're asking as much as one would pay for new house and land packages just 1-2km further out. Thoughts?

 

You will need a certain amount for the deposit plus get a loan to buy in cairns.

you need to compare the return of buying in cairns (plus the rent you dont have to pay) versus what you would have bought instead.

unless you have no other investment plans.

 

Yea, we don't have any major investment plans. I had planned to buy a (more expensive) PPOR in Brisbane in 2-3 years anyway so I'm just bringing this purchase forward. The opportunity cost here is its loan-offsetting value and that has already been accounted for.

All that said and done, as mentioned previously, we're ahead roughly 13k before factoring in rates ~2.5k, insurance ~2k and maintenance at 1% or ~4.5k giving us an annual networth increase of about 4k assuming no capital gains.

Lastly, part of me posting here is to ask this community if I should or should not expect any capital gains. Thanks!