Join Australia's most dynamic and respected property investment community

Advice Needed!

Discussion in 'General Property Chat' started by EastOrWest, 5th Jun, 2016.

  1. EastOrWest

    EastOrWest Member

    Joined:
    5th Jun, 2016
    Posts:
    8
    Location:
    Altona Meadows
    Hi. I have just paid off my PPOR (a 3BR 500sqm land) in Altona Meadows (Valued at 450k approx. No growth at all).
    I have a son who is turning 5 and will start school in 2017. My wife and I have decided to buy a new house in an area with good schools and not too far from city (work) plus good potential for future capital growth. Budget 700-900K. Which areas should I be looking at?
    Also Should I keep my current house or sell that & buy an IP somewhere else? Any advice would be greatly appreciated!
     
    Last edited: 5th Jun, 2016
  2. MsAli

    MsAli Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,147
    Location:
    Sydney, Australia
    Selling might be a good option as the house is now paid off and any equity will not be tax deductible plus will cost you interest repayments to access the equity.
     
  3. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    2,716
    Location:
    Mornington Peninsula
    By the time you sell (assuming no growth) you will be close to making a loss after all costs are tallied?

    Another option is to keep the PPoR as a very pos geared rental, find a place to rent near work, and save for a deposit on a new house, then get another new loan for the new house.

    Your "footprint" is now doubled, and accelerating the wealth faster.

    The rent from the existing PPoR will offset a lot of the new rent you might have to pay and then the new future loan repayments on the new PPoR once you move in.

    We have a similar conumdrum; we have a fully paid off IP which is enormously pos geared now, but have recently bought a future PPoR site which will need a knock down and rebuild (currently tenanted) and we are renting ourselves..would not qualify for a rebuld loan right now, so have elected to rent for 2 years and smash the existing PPoR loan (with the help of the rent from it). Reuild, and then move in....we could move in right away and pay no rent at all, but then we have to move out again for at least 6 months while the house is being rebuilt.

    Do we sell the IP to fund the new build, or keep the IP and borrow for the build?
    It's a bit swings and roundabouts, and if you sell, you lose the future growth from the existing IP.

    Consider keeping the PPoR as a rental, and crunch the numbers a bit.
     
    EastOrWest, wylie and Jingo like this.
  4. Hodge

    Hodge Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    514
    Location:
    Melbourne
    How could you have had zero growth? I live near the area and have seen prices rise. Did you overpay?
     
    Jingo likes this.
  5. Jingo

    Jingo Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    94
    Location:
    Melbourne
    Prices in AM have risen by at least 9% over the past year. The area tends to play catch up at the tail end of a growth period. The same situation occurred in 2010.

    East West, if your place has two bathrooms and a garage it should be worth around $500,000. Perhaps re-check its value.
     
    Hodge likes this.
  6. eng

    eng Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    114
    Location:
    Macarthur, NSW
    You might want to also post in Property Finance and ask a broker who is knowledgeable about the areas you're interested. Look at the options on what to do with your current home, how much equity you could pull out, consider risks and future goals etc.
    I believe @MsAli is into mortgage broking too
     
  7. Hodge

    Hodge Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    514
    Location:
    Melbourne
    @Jingo spot on. Altona meadows is always one of the last suburbs to see growth. Same thing for laverton.
     
    Jingo likes this.
  8. EastOrWest

    EastOrWest Member

    Joined:
    5th Jun, 2016
    Posts:
    8
    Location:
    Altona Meadows
    Hi...
    My place only has one bathroom and a car port. :(
     
  9. Hodge

    Hodge Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    514
    Location:
    Melbourne
    How many bedrooms?
     
  10. EastOrWest

    EastOrWest Member

    Joined:
    5th Jun, 2016
    Posts:
    8
    Location:
    Altona Meadows
    Thank you very much for the replies! Any suggestions on which areas I should look at for buying? Most of my friends have suggested the east (Burwood East, Blackburn South area)? I am very confused. My priority is for good public schools for my son.
     
  11. EastOrWest

    EastOrWest Member

    Joined:
    5th Jun, 2016
    Posts:
    8
    Location:
    Altona Meadows
    3Br. Weatherboard but rendered.
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    Coincidentally I just wrote about 11 strategies you could use when moving from a paid off PPOR to a new PPOR for which you have to borrow:

    Strategy: 11 Strategies for when you move out of the PPOR and keep it
     
    EastOrWest likes this.
  13. EastOrWest

    EastOrWest Member

    Joined:
    5th Jun, 2016
    Posts:
    8
    Location:
    Altona Meadows
    Sorry I meant to say minimal growth compared to other areas. Do you think it would be a good idea to hold long term or sell out and say buy in Places likePC/Tarneit?
     
  14. Hodge

    Hodge Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    514
    Location:
    Melbourne
    I would hold on to the property for now. Is their a way you could convert the carport into a lockable garage?
     
    EastOrWest likes this.
  15. EastOrWest

    EastOrWest Member

    Joined:
    5th Jun, 2016
    Posts:
    8
    Location:
    Altona Meadows
    Thank you. A bit difficult I would say but I might consider it if it might add decent amount in the price of the property. I am leaning towards holding it as well.
     
    Last edited: 5th Jun, 2016
  16. melbournian

    melbournian Well-Known Member

    Joined:
    2nd Sep, 2015
    Posts:
    1,331
    Location:
    melbourne
    Depending whereabouts you home is closer inwards to princess freeway towards truganina laverton or to the esplanade which in altona is prime real estate as you have those beach side ocean views, i would hold it. Altona is already getting expensive as it is next up from williamstown and you can only reasonably assume that altona meadows may follow. 500sqm nowadays is still hard to come by in this market within distance to the CBD.

    not sure why other poster said if you drawn equity to buy an IP with the sole purpose to buy an IP as a rental it is not deductible, doesn't seem right as i have done this before many years ago.
     
    EastOrWest likes this.
  17. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,118
    Location:
    Melbourne
    I have posted before and am somewhat biased but I still maintain Melbournes North West is the most undervalued real estate in Melbourne.
    For your budget you could buy in Niddrie, Airport West, Essenson North/West.

    As far as schooling goes they are zoned to some of the best in the state.
     
    EastOrWest likes this.
  18. Joynz

    Joynz Well-Known Member

    Joined:
    5th Apr, 2016
    Posts:
    836
    Location:
    Melbourne
    What schools are they?
     
  19. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,118
    Location:
    Melbourne
    I was more referring to high schools but appreciate the poster has a young one.

    For high school though there are a number of great private options;

    St Bernard's
    Penleigh and Essendon Grammar
    St Columbus
    Ave Maria
    Lava Hall
     
    EastOrWest likes this.