How much of your income (%) does your ppor cost you a week?

How difficult was it at a lower wage, at 39% and interest rates being higher?

 

At the time it didn't seem too bad, but I had to do the numbers a couple of times just before as it looks so bad. I was working my way towards the position I'm in now, so I knew/hoped it would be temporary & luckily it has panned out. Also, I saved money in any possible way - buy in bulk when things are cheap, two-for-one deals if going out for tea, do any job I can do myself rather than paying others (even done own repairs on washing machine, oven & cars) and I still largely do these things anyway, but am able to relax a bit more now.

 

Now 0%.

We live on acreage and it is a great lifestyle (but I am a farmer's son - of course, I would say that).

When we bought the property in 1988, interest rates were 9%. My due diligence informed me that they had been as high 12%; this was something we could handle. I crunched the numbers at 15% (not that I expected them to go that high); it was doable but only just.

As we all know, rates went to over 17%. They were scary days. We had to pull our heads in. We even included our kids in the tough family meetings where we discussed that food was mandatory but everything else was discretionary.

During this time, my inlaws went belly up. They had nowhere else to go, so they moved in with us. This probably saved us from really tough times. They paid us some money for board, they contributed to household expenses such as food, power, etc and they looked after our two young kids allowing both of us to work longer hours.

Bit of a long story but the main points are:

1. If you buy acreage, you will love the lifestyle.
2. If the **** hits the fan, it is amazing what you can and will do to keep something that you love.

Another reason I love acreage is that % land content is typically higher and we all know that "land appreciate, buildings depreciate".

Good luck with your decision.

 

Wow, see, this is why I love having more experienced folk on the forum!

 

I never really believe in % actually. Think about it, if you are earning 4k/month and pay 50% in ppor, you are in real trouble. But if you are earning 10k/month and paying 50%, life isn't that bad

 

About 37% of take home pay currently, but that is because we are paying more than we need to, to pay off the mortgage sooner. We kept paying at the same rate as it was in 2010, and interest rates have come down since. If we paid only what was necessary, it would be about 24%.

I only work part time. When I go on maternity leave (again) it will be about 44%.

Yup, its a lot. But we don't spend much on things like clothes, going out etc.

 

Things to consider... More around "family" and creating a home, than finance.

if you can lock in a family home that has room for however many kids you want, it could give you a lot of stability for years ahead. It's unsettling to move with young family and harder once they start school. Plus, over time you can add value. Or you can pay down the debt by making the house "earn its way" before you have kids - thru boarders, home stay students $500 per week; or air bnb a room. If you both really love the home then maybe just go for it, it could be a haven for years to come. And how would you feel in a few years time if you are renting and regretting??

 

We just bought acreage also, I think we are about 25% p&i of dual incomes. But realistically if we add in the money my partner saves from not agisting her horses elsewhere any more we are better off then our old much cheaper house.

But this was more a lifestyle purchase for us so $$ didn't factor into it too much, as long as we didn't go too silly with it of course.

 

Our PPOR repayments are over 10k/month, been there close to 4 years now.
That's probably about half our combined official salaries, but quite negligible in the overall asset/cash flow calculation.
At first I thought it was a bit of a push spending that much on a POOR, but was thinking of the CG potential, and it's been good in Sydney the last few years. CGT free is a great benefit for PPORs if you want to sell.

 

Just buy the thing, seems like it would make you genuinely happy.
You can always make more money.

 

Totally agree. We bought our acreage when our kids were 4 and 2. That was over 28 years ago. They loved the open spaces, our daughter had horses, our place was the favourite for family gatherings, ...

Now our kids are bringing their kids to enjoy the lifestyle. What price do you put on that?

So true. As I wrote in my earlier post, we were really stretched when we bought our acreage. Then interest rates dropped so our financial situation improved - we started our IP journey and we started two business. During this time, we ripped out and upgraded the kitchen, the main bathroom, the ensuite, the rear deck, ...

Our kids use to 'tease us' that we lived in one of the worst five houses in the street (there are some really nice houses in our street) and that all of our IPs were better than our home (true but we pointed out that tenants were helping to pay for those properties).

So, about 5 years ago when we retired from business and were at the end of our IP accumulation journey, we demolished our old house and built a new one. We are now living in one of the best five houses in the street. Now we 'tease' our kids as they have left home and live in Melbourne.

 

From memory, only the first 5 acres are CGT free with acreage PPORs.

When we sell, we understand that we will be paying CGT on half an acre (hopefully, the worst half acre). So, for us, not a big issue.

 

This is true. Had the discussion last night, might have to apply for a higher role to help with the costs or take other job that pays a lot more but really like the role I'm in. Or sell off one of the investments. Theres room to build a yoga studio for the mrs so she can teach her classes and work from home.
Still working the figures and scenarios to try and get comfortable with it.
Wish I never seen the house, I've never cared about houses prior but I'm hooked.

 

The other thing is that house prices just seem to rise when looking for a home... So whenever you buy it may seem just a bit on the high side.

And also: It's so different to shopping for an ip. It's not easy to find a place you both feel is "home" and you can just afford. the next one may not come for years!!

 

Great point which I over looked. It would also depend how much people spend on lifestyle/living expenses.

 

Were currently at 19% on IO (salaries combined), but actually put about 60% into it trying to pay down faster.

 

I do not think it matters, I never looked at things from that angle.

As long as you can afford it. Can always cut non essentials if things get tight.

We had a good discussion on this here Rural holding tax wise

 

Right now 23% on single income - it's great to live in Brisbane! I think originally it was about 35%

ahh.. the early 90's.. I was young, but my parents went through the same. I think it strongly affected some of my conservatism today with not trying to live beyond ones means. Unfortunately probably nobody under the age of 35 really has gone through that; in the major cities at least. Hate to say it, but I think if it happened again it could be a good thing in some ways.

 

33% based on mine and my partners salary. If it was just mine then it would be 50%. This is for the house of my dreams... best decision I have ever made (so far) so I think its a good investment for my own happiness.

Its been posted before, however it is all relevant to what you are earning. Even if I was on my own I could comfortably afford the house and my IP's and still save significantly.

 

Thanks for that link. I didn't see that thread.

Also, I learnt something. I knew we could nominate the portion subject to CGT (for us, the half acre down the back where the creek flows through and floods) but I thought it was 5 acres including the house. Now I see that it is the house plus 5 acres. Our house, pool, cabana, etc is over 1,000sqm. So we only have to pay CGT on the worst 4,000sqm