Buying future PPoR as an IP first

Keen to get inputs from those who bought a house to rent out first with an intention to move into it after x number of years as PPoR. What are the gotchas?

 

I rentvested.

I have looked back many times over the years and thought; why didn't I do what you suggested? Why didn't I buy my dream house as my first IP?

Then I realise over the course of the last 15 years my preferences and needs have changed about 50 times and what a pointless endeavour that would have been.

Buy what will make you the most money. You're unlikely to be able to plan that far ahead. It's really hard to do.

 

It needs to be a sound investment first.
I've seen people buy with a view to retire there but as jaybean said- things change.

We bought what was going to be our retirement home in Sydney, then we decided to move to the Gold Coast. It was a great investment choice anyway so worked out well for us.

 

Buying as both an investment AND a PPOR means you'll end up with a crap investment, or a PPOR that doesn't make your heart happy.

Best to go one way or another - investing should not be an emotional decision.

 

Thanks for your input everyone! I was thinking along the lines of buying something for a KDR with a view to renting it out the first 4-5 years to help with the cost of the KDR.

 

I have. Purchased 2019 and plan to move in 2030. Long way off I know. Will renovate 2027ish and rent out briefly again before moving back home to Aus. This is the plan if all stays consistent!

 

We did as well. Bought last year. Plan to move in a couple of years.

it only works if you know what your future PPOR looks like. Most people don’t or cannot plan their life that way. We were lucky that we had more certainty to be able to make that decision.

It also only make sense to do it, if you have a high conviction that prices will be materially higher.

these questions are very individual, so it is not for everyone.

Personally I found it to be very good strategy, as you can then plan future investments in a better way. Otherwise I tended to over save and didn’t want I over commit on my investments to find out I can’t my buy my own house. Quick way to get in trouble with your other half!

 

I wandered into this thread because this is exactly what I'm considering right now, but I'm coming from an investment mindset first, and PPoR second. I think its entirely possible to keep emotions in check and retain sound judgement when making decisions. Some advantages are that you won't get slugged with CGT in future nor do you incur future buying costs, you can also add value to your own PPoR and it becomes a tax deduction, some improvements take time (eg: growing gardens) and so they are ready to go when you move in rather than starting from scratch etc.

It's a bad idea though of course if you let emotion get the better of you and pay way above market value for something that only you love about the property, but it has nothing else going for it from an investment perspective eg: it's not good for either CG or rental yield.

 

I think I will only purchase properties that I would want to live in because it just opens up more strategies in the future - tax and personal. There is the opportunity to move into the investment property with the most capital gains and sell the former main residence CGT free.
If a couple plan it right it is possible to have 3 properties sold all exempt from CGT. But you have to be able to live in them to achieve this.

 

Hi @Terry_w , does that strategy mean the owner moves in & dies whilst the property is main residence to avoid CGT or is it another option?
Thanks

 

Yep

 

We purchased an apartment with a view to downsize in 4 years, from a 5br house to a 2br unit.
Plan was to free up capital to invest, and upon retirement sell the unit to move into another IP (dream home, yet to be purchased).
All looked good, then we ended up with our grand daughter .....
Need a new plan !