Buy PPOR or IP?

Discussion in 'What to buy' started by Db73, 1st May, 2017.

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  1. Db73

    Db73 Member

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    Hi All

    I just wanted to put my feelers or there and see what the good people of propertychat thought? To be honest I'm confused and don't know which way to turn.

    I'm about to recieve $100k (late settlement from seperation). I have $20k in savings, no HECS debt, credit card debt of $5k and car loan of $8k. I earn $100k gross pa.

    I would dearly love to buy myself and 2 teenage kids a home that was ours, but >> would I be better using the money to put towards an IP (try to get positively geared) and wait 12 months or so and perhaps use equity in IP for our own place to live?

    TIA
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    In 12 months you'd be very lucky to have enough equity to use as a deposit for a PPOR. If you know of a spot that would work for this though, in theory you'd be better off buying your PPOR and renting it out for a year, then using the equity to buy an IP. Much better from a tax perspective and possibly better from a first home buyer perspective too.
     
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  3. Ed Barton

    Ed Barton Well-Known Member

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    What sort of custody do you have of your kids? Are they early teens or late teens?

    Since you seem to want somewhere to live for your kids - what will they want for the next few years?
     
    Last edited: 2nd May, 2017
  4. Db73

    Db73 Member

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    I don't have custody of them, neither does their Father as we have been amicable and avoided court. Kids (13 & 15) primarily are with me.
     
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  5. Db73

    Db73 Member

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    Thank you @Jess Peletier
     
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  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Personally - I'd buy a PPOR then. At least that way you're not at the mercy of a landlord who might decide to sell/move in at some point. There's CGT exemption with PPOR's too.

    Cheers

    Jamie
     
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  7. Db73

    Db73 Member

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    Thank you @Jamie Moore - good advice
     
  8. Ed Barton

    Ed Barton Well-Known Member

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    I would buy a PPOR if I could afford one that meets my kid's needs (that seems a priority for you). On your income and assets, I'd be looking to spend no more than $550k (you could borrow more?).

    Will your kids need to be close to uni soon? School now? Close to dad? In an area, they're familiar with? Where is dad living? - what sort of place does he have?

    So many questions.
     
  9. Db73

    Db73 Member

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    They need to close to public transport/school bus. We live Southside brisbane (current rental property) which is close to work for me, close to school bus and public transport as well as my son's part time job. We live approx 13km from his dad who owns his own house outright on acreage. Would prefer to stay in current area due to all the above.

    As far as uni goes I have no idea but with public transport etc it shouldn't be an issue (we have a very good service in our area). Besides all that my son already has his own car his dad got him when he was 8
     
  10. Ed Barton

    Ed Barton Well-Known Member

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    Keep renting then.
     
  11. Db73

    Db73 Member

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    I'm looking to buy in current area
     
  12. The Y-man

    The Y-man Moderator Staff Member

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    Needs a lot more info for anyone to make anything other than a very general statement.
    For instance which suburbs is "current area"?
    What are your requirements (must haves) eg number of BedRm, Bthrm?
    What are you currently renting? (house, unit, etc)
    How much rent are you currently paying?

    Without this, we have no idea of prices in the area, viable alternatives, etc.

    Given the info so far, I agree with @Ed Barton - keep status quo.


    The Y-man
     
  13. Ed Barton

    Ed Barton Well-Known Member

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    Then buy
     
  14. Db73

    Db73 Member

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    Needs a lot more info for anyone to make anything other than a very general statement.
    For instance which suburbs is "current area"?
    What are your requirements (must haves) eg number of BedRm, Bthrm?
    What are you currently renting? (house, unit, etc)
    How much rent are you currently paying?

    Without this, we have no idea of prices in the area, viable alternatives, etc.

    Thank you @The Y-man . I perhaps should have worded my question differently. I was wanting to know if buying own home vs investment property is the way to go. I appreciate that without all the specifics it may be difficult to comment, I was curious in general terms.

    I've researched my area and am looking for properties <$500 k.
     
  15. The Y-man

    The Y-man Moderator Staff Member

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    In my opinion, buying the investment property is *usually* the better way - you get to select the best investment without compromising it regarding your personal needs. Otherwise you restrict all the things I asked about - for example the surburb you live in may be the best as a ppor but totally crappy as an investment. On the other hand, the ideal IP may be in an area you wouldn't want to even consider living in.

    So in general terms - keep renting. Buy investment properties.

    The Y-man
     
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  16. FromWatsy

    FromWatsy Member

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    1st option to buy ppor is the best and forget about IP. Just try to pay off your debt asap, while rates are low. You are not in your early 30s and paying mortgage on your own is not a good fun. By the time you pay it off (let's say in 15 y), then you start making savings for the retirement (and then might think about IP). Great if you can find a ppor within same area or nearby where you are currently. If you can't afford/ find anything suitable on your budget, then you can go with an option 2.
    2nd option is to stay put and keep renting where you are currently. Try to find a place as an IP where you see yourself living in say 5 years when kids are independent. In that case you still buying future ppor and make your money working for you. You need to educate yourself what involves to be an investor, responsibilities and risks. It's not as simple.
    Option 3 is the worse - keep money in the bank and keep renting. Why? Cause cash depreciates and tempts to be spent and , well, it's a waste. I won't recommend buying shares or to get involved in some enterprises. If you don't have fin.investments knowedge , better stay away. It's very easy to fall for some dodgy schemes sold by fin advisers only to find out in couple of years your 100k disappeared into nowhere. Share market is very volatile and you need a very good experience to get decent returns from it.
    Hope it was helpful. Good luck.
     
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  17. Db73

    Db73 Member

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    Thank you @FromWatsy for your advice, I will take it on board. I imagine it's very hard paying a mortgage on your own.


    (please ignore my multiple posts previously- i since deleted, not too crash at using forum/replying with quotes etc(
     
  18. Db73

    Db73 Member

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    Thank you @The Y-man . I plan to go see a mortgage broker and see how the two different scenarios will work for me serviceability wise. Your advice is appreciated
     
  19. Pentanol

    Pentanol Well-Known Member

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    Hi Db73, sad to hear about your current circumstances but glad to hear its amicable and you're going through the courts as most of the time, the Lawyer wins. Just thinking about your situation more and obviously its personal, but I was just wondering you may be entitled to a share of the house which your husband owns? The reason why I ask is because you maybe able to come to an agreement to get equity out of the PPOR to be used as deposit for your next property. You may be able to buy a cheap Loganlea house that may need some work, do a bit of a reno and say in a years time get equity out to buy a new property that would either be your PPOR or IP depending on whether the Loganlea house is where you want to live. I would think ~$300-340k would still be good value in that area. I had a drive around there recently and its a nice around within 1km of the station and I was told that theres been no problems around that area by a old couple who's been there for 30 years. Hope this helps.
     
  20. Pentanol

    Pentanol Well-Known Member

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