Hold PPOR + buy townhouse or upgrade PPOR

Discussion in 'Investment Strategy' started by Braden_vB, 6th Mar, 2021.

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  1. Braden_vB

    Braden_vB New Member

    Joined:
    24th Oct, 2020
    Posts:
    3
    Location:
    Melbourne
    With a growing family we've decided that our current PPOR (Kingsville) is too small for our needs. We have $110K in cash and $500K in equity - PPOR just valued at $1.3-1.35M.

    Based on where we want to live we do not have the equity/cash to hold our existing PPOR and buy a new freestanding 4 bed PPOR ($1.7-$1.9M)

    We are considering the following two scenarios:
    1. Retain our existing PPOR and buy a 4 bed townhouse $1.3-$1.5M to move into
    2. Sell our PPOR and upgrade to the ideal freestanding PPOR

    If we go with Option No.1 the intention would be to role the Townhouse into investment property No.2 in the future and then upgrade to the freestanding PPOR. My main concern is capital growth in a townhouse as we got burnt buying an apartment (Melbourne) as our first PPOR, If only I'd found this forum back then!

    Or should we sink our money into the PPOR so we could buy a larger block (opportunity for development) in better parts of the bluechip areas we are looking at.

    Suburbs on our list include: Yarraville, Newport, Williamstown, Moonee Ponds, Essendon. Highett, Hampton and Sandringham

    In summary: Are townhouses a viable investment choice as a stepping stone or is it land all the way?
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    thats a very long piece of string

    With nil soft or hard data really you arent going to get much of a useful response, sorta like asking should I get married to X

    ta
    rolf
     
  3. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Location:
    Bella Vista
    Your first step is to see what your borrowing capacity is, especially for scenario 1.
     
  4. Braden_vB

    Braden_vB New Member

    Joined:
    24th Oct, 2020
    Posts:
    3
    Location:
    Melbourne
    Cheers Rolf, it's taken me such a long time to make my first ever post for fear of exactly this outcome. I'll go back to the drawing board and reconsider how to better ask my question.
     
  5. Braden_vB

    Braden_vB New Member

    Joined:
    24th Oct, 2020
    Posts:
    3
    Location:
    Melbourne
    Borrowing capacity has been checked with our mortgage broker and is OK (at-least for the initial step of Option 1). Household income is >$450K p.a although its reduced this year as we take maternity and paternity leave over the year. This reduction in income is preventing us from improving our immediate cash position to purchase a freestanding while retaining our existing house. Like most people I'm starting to get FOMO and concerned that if we don't act now we'll be paying more for the same outcome in 12 months time.