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How to juggle IP and ppor purchases

Discussion in 'General Property Chat' started by bob shovel, 18th Oct, 2015.

  1. bob shovel

    bob shovel Well-Known Member

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    Hi team PC

    How have you gone buying IP's and buying a ppor?

    We are moving around and have yet to settle in the "forever house " (or longer than 2year house!) we are refinancing and getting ready to buy a couple of IP's but need a plan to have some cashola aside to buy a ppor

    At the moment we'll be over west till early 2017 so have time to buy IP's and use equity available but the numbers will need to be crunched to work out the way forward. Whether we keep cash in reserve for a ppor, but I don't really want to. I'd rather use the equity to buy and buy smart and get the deposits back from the CG (give or take a year or 2)

    We have an idea of where we'd like to settle (Bellingen /Coffs) but given our track history things change at the drop of a hat pending the opportunities that come up at the time, so we'd like to secure an ip come ppor, although that isn't a smart "investor technique" we just dont want to the area to increase and miss out. We wouldn't be buying a mega house or anything crazy just something we could renovate to bring our own touch when we moved in.

    The area seems to be attracting people priced out of Sydney plus tree changers, plus add a Sydney ripple of think things will increase but nothing crazy like Sydney over the next few years.

    Any thoughts or war stories would be nice to hear.

    I think I may get the advice to buy smart IP's and sort out the pporwhen we're ready.... Did I just answer my own thread in the first post??
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You want to keep cash available for the future PPOR so try to borrow 105% for all IP purchases. Consider structuring carefully including the use of spousal loans.
     
  3. sandyfeet

    sandyfeet Well-Known Member

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    Very much dependent on your circumstances etc etc, some people may be happy to delay a PPR for years and buy multiple IPs. We have recently worked out how we were going to deal with a situation very similar to yours and whilst also doing a couple of developments we are getting as much $$ together for our own home in a couple of years. We will probably sell down some IPs to reduce debt and use equity in PPR for future IPs. Out current situation very much suits this though + our dream home will be reasonably cheap
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    We are in the same situation as you - bought IP's well before our PPOR.

    If you have equity, I'd keep some aside in a LOC to pay for all your IP expenses and save all the cash you'd use into an offset.

    You want as much cash as possible to offset your PPOR. If you're going to use equity to buy your PPOR (for eg if it's going to be an IP first and you're not sure it will become a PPOR), you want as much cash available to offset it as possible. That way you can keep on buying IP's indefintiely, and when one does become a PPOR, you have a large chunk of cash to offset the loan with.

    It keeps things very flexible.
     
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  5. bob shovel

    bob shovel Well-Known Member

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    That was my next Avenue of questions...

    I am a stay at home dad, wife works aka sugar mumma :) should we refinance in joint names then buy in just mine, or will tax man look at us as one.
    Avoiding Neg gearing for purchases but could be Avenue to take advantage of as sugar mumma is on a good wicket
     
  6. D.T.

    D.T. Adelaide Property Manager Business Member

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    Could the job situation change in the future?

    PPOR in both names and IPs in either persons names or in trusts once landtax thresholds are reached is the way to go IMO.
     
  7. dabbler

    dabbler Well-Known Member

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    I do not think it is stupid, buy what you would like to live in if you can afford to do so, then move when it suits you.
     
  8. bob shovel

    bob shovel Well-Known Member

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    Great way to do it, we wanted to go the dev track but doesn't fit with finance and work at the moment

    Work will change back to both of us working part time (plan at the moment) but very up in the air as a year is soooo far away! :p
    So we should just alternate IP's in each name till land tax builds up?

    We are just in Sydney now visiting family, friends etc and we've locked in a work contract extension whilst here as we plan not come back to traffic and chaos etc etc (great place to visit though!) . Some sick relos and family friends passing (cancer the a hole!)has confirmed we are on the right path living life and we are going to really hook in next year and set some bigger targets! Most revolving around getting away from that middle class ideal of working for some ridiculous amount of time with bugger all to show for it at the end! Plus stick it to some family members who think we're going no where by doing what we're doing!
     
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  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You should come off any loans you are not needed on - if not on title avoid being on loans. It serves no purpose. If you are on title then you must be on the loan.

    How you buy the next one would depend on your situation such as which state, cashflow and how much cash you got lying around.
     
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  10. bob shovel

    bob shovel Well-Known Member

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    @Jess Peletier and co is there a break even point with renting v ppor?

    Found a little beauty for sale 200k asking price, (needs 30-40k Reno) . Currently renting 400/wk
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Wow! Nice yield!

    @bob shovel There is a BE point (assuming you're thinking in regard to future purchases) - I had the CBA calc handy so used that, and in that case you're better off buying - assessed repays on the OO loan of $200k @ 4.2% are $1175 compared to rent @ $400/wk $1733.
     
  12. bob shovel

    bob shovel Well-Known Member

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    Sorry. Missed one word and changes it significantly.
    I wish that would be the yield. We're currently paying 400

    But roughly, but under sale price and Reno say all up 230 max. Should get 300/wk.or potential stayz Airbnb place
     
  13. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    In the example above i've asssumed reno cost is payed for in cash, but if you're using equity it will change to $1350 @ 4.2%, so still better off buying to live in than paying $400/wk rent, from a 'servicing future loans' perspective.
     
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  14. bob shovel

    bob shovel Well-Known Member

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    @Jess Peletier cool thanks for that! I thought there would be a point they pass each other.

    Having a look today. It's a big fixer upper! :eek: hundred year old 2x1. So half what were in now (4x2)! Next to train line but right in town, plus there are no decent rentals under 350. A small near place could appeal to people. Or keep some youngsters in town. See what the re days today
     
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  15. bob shovel

    bob shovel Well-Known Member

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    Just did my 5 minutes DD :D
    Neighboring block twice the land (4200m) with a similar vintage 3x1 in better condition sold for 200.
    This one I have my eye on is basically land value.. New dev blocks are going for 60-80k. So not sure what's going on with this one. It's next door to train line to. Offer... 50k! Sounds rude but can't see why they 200k on it, maybe realistically 130 could be happy medium. May be council owned original property, couldn't see sales history on ksou
     
    Last edited: 13th Jan, 2016