NSW Is it silly to buy a ppor in syd ? Plus other questions

Discussion in 'Where to Buy' started by HBK, 20th Mar, 2022.

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  1. HBK

    HBK Well-Known Member

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    I think everything is way over valued , but cant predict the future. Would it be stupid paying this much for a house ? Even in mt druitt im looking at 700-900k depending on the house.
    This is my plan i want your thoughts
    Instead of renting i can park my money in a house in syd and only pay IO on my loan while the place appreciates in value . If i pay IO on a fixed or offset loan it will kinda possibly work out cheaper then renting. After the 5 year IO loan ill either try and extend it and eventually if i want to ill sell it and not pay CG tax. So instead of renting i can make use of apprecation and make some money. Who knows i might keep it .

    My other question is how long do i have to stay in a house to later rent it out as a investment but not pay capital gains tax ? And for how long can i have it rented out for before i have to move back in to not pay CG tax ?
    Also when taking out the loan do i have to take out a ppor loan or can i still take out a investment loan but live in it to not pay CG tax ? Or do i have to take out a ppor loan in order not to pay CG tax when if i decide to sell it.
    Thanks
     
  2. Scottstots

    Scottstots Well-Known Member

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    Personally, as a PPOR with the intention to sell for CG within the 5 + year mark I would do P&I loan because it will enable you to build some equity for when you are aiming to buy your next property. But this will depend on your personal financial circumstances. Personally, IO only appeals to me if I am buying the property as an investment due to the tax benefits of negative gearing.

    You don't need to pay CGT on your PPOR, but if you end up renting it out as an investment, I think you have to live in it for at least 6 months before you can rent it out as an investment and still claim the CGT exemption as long as you're within the 6 year period (i.e. move back into your main residence within a 6 year period).

    I'm pretty sure if you are buying the property to treat initially as a PPOR, you should take out a PPOR loan. I'm honestly not too sure what happens once you start to rent it out though as I'm not a banker and haven't been in that position before.
     
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Interest only isnt that common on owner occ loans, doable with some, quite a higher rate than Owner Occ PI

    Will the loan be under 80 % ?

    ta
    rolf
     
  4. Trainee

    Trainee Well-Known Member

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    Did you think it was overvalued a few years ago?

    What do you think prices will look like in 20 years?

    if it falls, and looks like it will fall further, will you buy? Have you done this before, say with shares?

    was it silly to buy a sydney house in 2000, 2009, 2017? Not anymore.

    how good is your gut feel, really?
     
    Last edited: 20th Mar, 2022
  5. HBK

    HBK Well-Known Member

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    So should i take it out as a investment loan then ? But can i still live in it and not pay capital gains tax ?? Or would i have to take it out as a ppor loan to not pay capital gains tax ?
    And they should be similar if its like 0.25% higher then i wouldn't care
    And yeah i can put down 20% deposit
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Sorry, meant an IO owner occ loan.

    At 80 % there are some ok options for IO with owner occ

    ta
    rolf
     
  7. Mark F

    Mark F Well-Known Member

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    For me there is rarely a time not to buy a ppor if that is where you are at in life. When you look at the finances think of the interest as rent replacement and principal component as enforced savings.
     
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  8. Whitecat

    Whitecat Well-Known Member

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    Wait.
    Sydney falling.
     
  9. Arthurark

    Arthurark Well-Known Member

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    I tend to think of PPORs as liabilities. If you love where you can buy, then you’re probably sweet. But in general I’ve found people (particularly FHBs and in Sydney) buy themselves a PPOR and spend the next 10-15 years grinding. They cannot afford where they wanna live so they live in compromise. I personally prefer my assets to be productive with cash flow. But I know people who’ve done well in Sydney. Although history is no indicator of future performance etc. Goodluck
     
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  10. thunderstrike888

    thunderstrike888 Well-Known Member

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    Read back some threads from 2016/2017 and all the ppl that could not believe the Sydney Median was like $1M and everyone saying "OMG I cant believe how much ppl are paying for this house".

    Today those prices back in 2016/2017 looks stupidly cheap. I also thought back in 2016/2017 Sydney was very expensive. Kicking myself now that I didn't buy more here but I made up for it by going crazy up in Brisbane/Logan/Moreton Bay.

    Even at the start of 2021 I said Sydney would hit $1.5M median and it did. Yes the prices today seems expensive, but think to yourself the supply side is not improving at all (in fact I read that its down 45%), the demand is through the roof, the international borders are open, the AUD is at 72-73c which means foreign buyers can buy houses for cheap in Australia.

    Add to that interest rates are low (and lets be real they will remain low for a long long time. Even if it rises over the next 3-4 years to say 2% cash rate its still cheap credit). I was buying houses when interest rates were 5.5% from ANZ and housing was still going up. Add to that the trillions of money pumped into the economy and devaluing your cash.

    I would say its still a relatively good time to buy as evident just today. Investor loans soaring now. They make up for like 1/3 of all loans now and expected to grow.
     
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  11. Trainee

    Trainee Well-Known Member

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    If you plan on living in sydney in the long term…. Think about the risks of NOT buying ppor.

    the decision wasnt any easier or any more certain in the past. You think that only because you know what happened afterwards. Some people still put good money down tho, and now they are sitting pretty.

    is sydney falling? Sure it might be. But how long will you wait?
     
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  12. skater

    skater Well-Known Member

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    Buying a PPOR is always a good idea. It's also a good idea to pay P&I to build more equity.

    This!

    Also please remember that Sydney is rather large and has many markets within markets. One area could be falling, while another is stable, while yet another is still rising.

    Buy what you can afford, when you can afford it.
     
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  13. MB18

    MB18 Well-Known Member

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    Im in a similar position to yourself. I can afford to buy a ppor, but I'm struggling to justify it... particularly when I consider the all in differences between renting and buying.

    Until either rents become more expensive or properties become cheaper, Ill contiune renting in Sydney and putting the difference into shares.
     
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  14. dabbler

    dabbler Well-Known Member

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    About 40 years ago, I used to hear this from some people, I bought my first home as soon as I could, I have never rented, I gave up all the partying etc to do so.

    Some people kept this going till about a decade ago, while you cannot do much with the equity in your home if your only going to be a homeowner, imagine the real cost of renting during this whole period.

    Luck has a lot to do with it, as does what you value or want for your own life, many are happy to rent and be close to where they can party and socialise, I understand that.

    Fast forward, and many people I know may all be in a similar position, I had a few bad luck periods, they prob had better luck, but you have to consider many things, such as how you lived, your health etc etc

    So it is a complex thing and not easy to answer, the only easy answer may be what we would do for ourselves.
     
  15. HBK

    HBK Well-Known Member

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    Are you been sarcastic or not i cant tell lol
     
  16. dabbler

    dabbler Well-Known Member

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    I do not think they are.

    It will def fall unless more monetary measures come along that no one expects.....how much but no one really knows.
     
  17. HBK

    HBK Well-Known Member

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    Yeah i few years ago i thought the same thing wish i brought then , but its just ridiculous right now.
    Obviously in 20 years higher prices dunno if that means i should buy tho.
    Yes depending how much it falls i will definitely buy.
    As for shares no , i brought in at a good price tho and never sold through the swings
     
  18. HBK

    HBK Well-Known Member

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    So maybe it will be worth while just waiting abit see what happens? Theres alot of things going on in the background atm .
     
  19. HBK

    HBK Well-Known Member

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    So are you renting ? Or did you buy somplace cheap ?
     
  20. Arthurark

    Arthurark Well-Known Member

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    Yes we rent in Syd and invest in other cities. It’s allowed us freedom and to live where we want to live whilst still having a hand in the markets.
     
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