Hi All, Our situation currently PPOR $640k Value- $450K Loan P & I IP 1 $480k Value- $340k Loan IO Rented out at $430 Per week Have $50 000 in savings which we will use for IP 2 With PPOR recently valued at 640k my broker has said I have around 62k useable equity for IP3. My question is what are the pros and cons on building a brand new house opposed to established we are considering land in Ripley or buying an establishment property in Bellbird Park or Kallangur. Our budget is around 350k. We are willing to use some of our cash if need be. Jordan
Please don't use your cash for the IP deposit - you also have equity in your IP you can use, as well as a trick with your PPOR that will allow you to borrow for the IP rather than use cash. Paying the cash into the PPOR, splitting and redrawing is a much better way to fund a deposit than using cash - it reduces your non-deductible debt and increases your deductible.
See https://propertychat.com.au/community/threads/tax-tip-9-dont-use-cash-in-offset-account-to-invest.2355/ https://propertychat.com.au/community/threads/tax-tip-88-use-cash-in-offset-to-invest-or-pay-down-loan-and-reborrow.6392/
Pros for new H&L could be Depreciation Lower Maintenance Get to build what you want Cons could be No income while holding land and building usually smaller land size less tennant desireability Newer stock tends to grow at a slightly lower rate, at lease for a few years. really does depend on the location and new land supply and current sales. Many outlying burbs suffer from H&L pack vals that are lower than actual cost due to one year resales. ta rolf
