Buy investment and rent or buy to live

Hello,

My partner and I are trying to figure out whether we should:
1. buy in a cheaper suburb with potential growth and rent in a desired suburb (inner west)
2. buy a 2br unit as a PPOR and live in it for a few years before either selling it to upgrade or rent it out

I've calculated the following but I'm sure there are many more considerations that I need to factor in.

Scenario 1: buy investment & rent
2br unit Harris Park
Purchase: $450,000.00
Weekly Rent: $410.00
Monthly repayments: $2,630.66
Anuual repayments: $31,567.92
Annual Tenant Rent Collected: $21,320.00
Annual Rent Paid in Dulwich (living there): $24,960.00
Annual Out of pocket: $35,207.92

Scenario 2: buy investment as live PPOR
2br unit Dulwich Hill
Purchase: $550,000.00
Weekly Rent: $480.00
Monthly repayments: $3,215.25
Annual repayments: $38,583.00
Annual Out of pocket: $38,583.00

Do you guys have any other things you think I should consider to help us make a more educated decision?

 

With option 1 there will also be higher stamp duty payable when purchasing along with agent fees and transaction costs if its sold in 5 years.
Rent is likely to rise at least with inflation over 5 years as well

 

Rent in NSW but buy in VIC an IP which will give you positive returns and your payments can be reduced.

Regards

 

Better financially to buy for investment and rent in the suburb you want to live in.

 

@property newb
here is a very good post from @Terry_w
Strategy: Rent where you live and Buy Investment Properties

 

Your monthly repayments are equal to 7% of the full purchase price.

To be more accurate you should calculate it on the loan size against the interest rate because that will make a big difference in your annual repayment figure.

 

In scenario 1 you need to add strata levies, council/water rates, insurance, property management fees (maybe). You can however subtract tax savings from depreciation (if applicable)

 

Any examples?

 

Not in NSW, the duty is the same whether owner occupied or investment.

 

Don't forget rents tend to rise each year too.

 

Will there be more cg in dulwich hill or Harris park..... That is the question

 

How about buy in dulwich hill as an ip, rent a smaller and cheaper 1 bedder in dulwich hill

 

Hi guys thanks for all the helpful advice so far!

@ashish1137 I've toyed with the idea of buying an IP in VIC, but looking at the property clock it seems like it's at the peak of the market, or would that not matter as much if it is positively geared?

@samiam great link, thanks!

@Nick Valsamis ahh yes I didn't consider that, I will re-do my calcs. Thanks!

@Befuddled thanks for that! I'll try to create a rough estimate with the above factors. Is there a way to figure out roughly if and how much depreciation one would get?

@Terry_w good point, I'll try to figure out an average annual rent rise and perhaps calculate it over the next 10 years

@neK hard to say which will perform better dulwich hill vs harris park, although I've read that both suburbs will do well. I've tried looking for some 1 bedders in dulwich but none to my liking (for some reason they many have bathrooms that are only accessible via the bedroom which is pretty unattractive to me and I'm assuming future tenants/buyers)

 

Tax Depreciation Calculator & App | BMT Tax Depreciation

Seems to be in the correct ballpark when i plugged in the numbers for my IPs

 

Hi,

As a lot of experienced members say, melbourne is market within markets, quite true for every region in Australia.

Inner suburbs/ cbd - a big no.
Eastern Suburbs/ dev sites - a big no again
Middle Ring suburbs - need to do the dd.
Outer ring suburbs - a lot of opportunities and a lot of places had cg in past 2 years period.
Geelong and vicinity - some good buys with cg and a lot of places had cg in past 2 years.
Armstrong creek and vicinity - some good buys and mostly places had cg in past 2 years.

All in all, melbourne has good buys in entry level markets. Entry level markets also have less probability to fall.

Growth in Melbourne steadily increasing, a lot people moving, infra already there, good job opportunities, a lot of options for entry level oo's.

This is all based on the way I see though.

A lot of potential in Brisbane as well. Worth exploring. I just read though. Don't own anything in Brisbane.

Regards

 

So thats why you are talking up Vic in a bris thread