Just sold our apartment and having $600K cash, what should we do?

Discussion in 'Investment Strategy' started by bimbim, 12th Feb, 2020.

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  1. bimbim

    bimbim Active Member

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    Hi wise friends,
    We just sold our principal property and ended up having $600K cash. We decided to rent and invest.
    My husband is time poor but making $200K a year and paying too much tax. I'm a stay at home mom with 16 month old kid.
    We never invested before so would love to hear your thoughts or even refer to someone we can seek advice given our situations.
    Really grateful for your time!
    Jan
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    Buy a new main residence?
    It is the only tax free asset you can have - besides super really.

    Perhaps get some financial advice as well.
     
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  3. bimbim

    bimbim Active Member

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    Thanks Terry! It makes senses, however we currently live in Pymble (good schools, not far from the northern beaches) so it’s hard to buy something within our budget. Hence we decided to invest, maybe one in the central coast and one in Brisbane
     
  4. wylie

    wylie Moderator Staff Member

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    Did you decide to rent and invest and that's why you sold your PPOR?

    Are you renting now in a place you want to live?

    Where was your PPOR?

    I think the idea of buying two properties as IPs and renting where you cannot afford to buy is one way to get ahead (but I've never rented, and hate the idea of paying rent - even though I understand if one invests elsewhere, then rent money is NOT dead money).
     
  5. Poppy

    Poppy Well-Known Member

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    You have a 600 deposit and 200pa income, what’s your loan approval?! Get a broker, get your figures, and either buy a PPR where you live now if you can hold it PLUS an IP

    That’s what I would do. Not sure what your loan approval is - find out!

    So if you get 1 mil then you have 1.5 to play with I’d buy a 3bd/2bth apartment as close to the train as possible near where you live. Then with the spare change a place in regional Australia or studio in Melbourne (maybe you’ll have 200)
     
  6. bimbim

    bimbim Active Member

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    Thanks for your reply!
    We bought an apartment in Pymble at the peak in 2007. It doesn’t suit a family hence we decided to sell to buy a house in the same area.
    Our mortgage broker said we could borrow up to 1.8m but it’ll be too hard to find a place with that price point in Pymble. so we’re thinking of renting and investing instead
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    That is why I moved out of Sydney! Can't find a place for $1.8mil? Consider moving to a larger regional town, if you can get a job, as this could shave 10 years or so off your working life.
     
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  8. The Y-man

    The Y-man Moderator Staff Member

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    Well.... I don't have too many people referring to Melb as a "larger regional town" but I guess it is in the eyes of the beholder....:oops:

    The Y-man
     
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  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    I should have said anywhere other than Sydney! Melb is getting pretty expensive though. Adelaide could be good.
     
  10. Poppy

    Poppy Well-Known Member

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    You need to reconsider some issues including your own values and tax considerations of IP purchase.

    Don’t underestimate both the emotional boost you get from owning and living in your own home (something I believe women and especially mothers feel).

    ....so you can’t afford your #1 choice of a big house near pymble station but with your budget you can still get a house on the upper north shore. That would be beneficial in terms of tax (tax free)

    Sydney is always going to hold value and be the city of choice for TNCs

    A recent IP I added to my collection was a 3bd/2bath apartment in Cremorne and guess who rents it? A family with a toddler and baby, both are company directors and hated the commute to their northern beaches house so rent near city.

    Many considerations..

    Another one is the fact that it’s harder to upgrade if your first home is 2 mil as stamp duty is so punishing. So if you do end up buying a house make sure the location is fabulous.
     
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  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Hi Jan!

    It comes down to a few core things.

    What is your end goal and what do you want your properties to achieve for you? This'll give you a starting point to work out how far you need to stretch your resources.

    How much personal cash-flow are you willing to contribute to your investment strategy each month?

    What's your borrowing capacity, now that your rental cost needs to be included?

    You need an investment strategy, and it's a combo of those things that will help you start to flesh it out. :)
     
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  12. bimbim

    bimbim Active Member

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    Really appreciate your advice Wyllie.
    We bought an apartment in Pymble but decided to sell it because it didn’t work out for us and we didn’t want to keep it as an investment.
    We hoped to sell it to buy a house in the same suburb only to find out that the market is going up and not much stocks around.
    Our goal was to live in our PP and maybe buying some IP later.
    But at the moment we feel like we might have priced out of where we want to live
    So we are leaning towards renting and buying IP instead
    My husband’s job is stressful and he doesn’t have more space to look into investing. So I’m doing the educating and discuss it with him.
    we need to get it right this time as our first purchase almost just broke even after we sold.
    I’ll be super grateful for any advice of where we can start with or someone who can help us
     
  13. bimbim

    bimbim Active Member

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    Hi Poppy, thanks so much for your thoughts on my situation. 3 months ago the mortgage broker (who helped us to buy our first PP) did an assessment and said we could buy a place up to 1.8m
    We would love to buy in the north shore but feel like we’re priced out
    Do you think Ryde has potential?
     
  14. bimbim

    bimbim Active Member

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    Sounds nice but moving isn’t an option for us. We have jobs here and especially our family and friends
    Thanks Terry!
     
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  15. bimbim

    bimbim Active Member

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    Dear Jess
    They’re great questions there. Do you think we will need a finance advisor to crunch numbers and draw a plan for us?
    Although we have to find a rental place (12 months agreement), we don’t want to miss out on our dream home because of taking too long...
    I’m committed to self educated and seek professional advice to make the right purchase this time
     
  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Ryde and esp East Ryde is lovely, but getting exxy as well

    ta
    rolf
     
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  17. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    You definitely do - and a conversation about what you're hoping to achieve will really go a long way.

    In my experience, lots of new investors know they need to build wealth, but don't really have a good idea about WHAT they're actually working toward. So getting clear on your investment goals and strategy will give you a heap of clarity to help you move forward confidently. :)
     
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  18. bimbim

    bimbim Active Member

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    Is there something you could help me with? I would love to have a chat with you if possible.
    thanks Jess!
     
  19. bimbim

    bimbim Active Member

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    I wonder if you know an good accountant who specialise in property?
     
  20. Lacrim

    Lacrim Well-Known Member

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    If you have your heart set on Pymble (east of train line).. and not anywhere else including the likes of Ryde, west pymble, east ryde, st Ives, etc, you could always buy your ideal future downsizer as an IP now and rent where you need to live till then?

    But were talking 20 plus years as a renter. I have no problem with it but a lot of folks do.
     
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