KDR my PPOR - Going around in Circles

I live about as far north as you can get In Sydney @ Berowra in a High Confidence Suburb, I Work in the next suburb which is less than a 5 Minute Drive or a 7 Minute Mount Bike Ride.

I’ve invested money into getting a custom designed house plan drawn up and placed on our existing block, and the building company had done the site survey and soil testing etc. and prepared a tender.

Thinking outside the square on the demo, I investigated the idea of using a specialised freight company to relocate our existing building to a vacant block on the Central Coast and having that as my investment property. It's going to cost 20K to demo so if I could move it for say 70-80k I'd be cheering... Well so I thought. However although the existing house is on stilts there are a couple of challenges with Concrete Front Patios and a concrete slab under the bathroom that made it very expensive and nuked the idea...

Anyway that snowballed me into speaking to a full time property investor who have told me I am doing it the wrong way around and steered me away from KDR. He suggesting I spend money and time on and investment property course/programme and educate myself before I do anything.

My current issue is our existing house is small 3 Beds, 1 Bath, 1 Living and I now have a teenage son and my wife who is about to kill someone, we have got a bit going on outside of the house too so to get any privacy we have been making phone calls from the car.

My existing mortgage is next to nothing, the proposed KDR with pool including my existing mortgage is going to be in the region 610-620k so I will still have plenty of equity as I would imagine the new build would be worth 1.3-1.4 by completion... I also have somewhere to stay rent free while the build in going on. But it is now starting to make sense that I educate myself further with the investment side of things first before I do anything.

I am not going to rush into anything just yet, I guess I just wanted to reach out to the group for their unbiased opinion.

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What's a KDR? I thought it was a kill death ratio.

 

Knock Down Rebuild?

I don't think you have it backwards at all - everyone's journey is different and if your PPOR needs replacing and you can afford it then get a nice house.

You can use the equity in the house on completion to start (or continue if you already have an IP) so I don't think this will stop you from an investment journey post build.

 

Knock Down Rebuild, there are a number of builders calling themselves the KDR experts, maybe their awesome at computer games too.

 

With a removal house on stumps and front and bathroom set-ups most time they chainsaw the house in half ..

Not too sure about the xxxx$ investment course ,but a chainsaw will be used in one way or another..​

 

Thanks westminster, I think I may have been lead away from the Knock Down Rebuild by someone in a completely different position.

I understand a PPOR is a liability, but there is a lifestyle decision too. I'm a 42 YO family man, wife two kids and a dog, 1 hour from the beach.

When the boys grow up their mates will be coming here, and we'll know what they're up to.

My mortgage broker has advised me I could do both, get started in an investment property and do the knockdown rebuild.

 

If you were in your 20s then yes maybe do some delayed gratification and do IPs before rewarding yourself with a nice PPOR but it sounds like you have already have a pretty good financial position so you have more options than some.

For some a PPOR will prevent them going forwards but it doesn't sound it will with you so I think it would be fine to follow your heart a bit.

 

I agree that it sounds like the right way to go for you and you can use the equity to buy investments.
Removal houses always end up costing more than estimated. For such a small house you may be better off using a project builder if the numbers stack up ie the end value of the land plus house is more than the total cost. I did a slide and raise on the one lot and it cost 100k. In hindsight I would've been better off knocking the old thing down and building.

 

thanks Beachgurl.

I Found a property on the central coast that had been destroyed by termites, my electrician said to me once that the quality of the hardwood timber used in my current house was so good that I could have the worlds biggest termite nest in the backyard and all my neighbors houses would be falling down but mine would be fine.

The cut in half and relocation idea quickly got way too expensive. And the setup within the home being the kitchen is in the middle facing backward would have made the cut even more challenging.

I am unfortunately emotionally attached to the existing house as we did a bathroom Reno on it less than 4 years ago that cost 25k. So to just demo it seems crazy but it is what it is.

 

That just like asking a gold dealer if gold is a good investment, Brokerage are there to lend you the maximum amount of money they can, just because you can doesn't mean you should, you need to look at your financial position, cash flow etc...

During the hey day of easy borrowing I know a person who borrow whatever the broker would come up for him, he has a few properties, then he run into cash flow issues, force to sell at a loss then the properties booms begins, has he stick with one investment properties he would be in a far far better place.

 

Ok I'll bite, - Brokers most certainly are NOT here to get people to borrow the maximum that they can, what an absolute rubbish statement
We don't hold guns to people's heads and we don't offer investment advice.
I can guarantee the person you mentioned wanted to invest in property, went about it the wrong way/bought dud properties and then blamed the broker for their poor investment property choices.

 

You are free to disagree but in my experience financial market is full of conflict of interest it is best to avoid getting yourself into that situation.

I am not saying everyone is like that but the safest course of action is you don't take advice from people selling the loan.

 

But that's exactly what you DID say, re-read it and consider deleting it because it's complete BS - you then went on to explain some BS story of 'someone you knew' etc etc so stop back pedaling @PandS - you said it, I called you out and only then have you said "I'm not saying everyone is like that"

 

Another way to interpret the statement in question is like this: My broker has checked my financials and says I would be able to access the funds to do both if I wanted to.

 

I agree with educating yourself, but be very wary of investment “courses” and “programs”. These are money making ventures for the presenters. Some are just fronts to sell overpriced and unappealing properties to unsuspecting beginners.

Read books, check out your local library. And spend time here searching these forums, there is a wealth of advice and you will soon find people whose advice is sound and aligned with your values. You can then search for their threads and comments.

That is just plain wrong. A well positioned, well maintained PPOR can be a cornerstone asset to building wealth, as well as providing a pleasant, comfortable and secure place to live and bring up your family.

 

only if you narrowly define an asset as cashflow positive in a 12 month period.

The cg free nature of ppor can make it an incredible asset long term.

and no, rent is not always dead money either.

 

Some people may think that way , myself i need no convincing investment wise as long as the ppor stays tax free then it gives one the freedom to do what ever they want and a position of control and sanctuary..

Something you may be unable to do in a rental property if your ''PM'' is on the ball as most are these days..

 

Michael Kiyosaki says it here at 7:32

 

Is adding a granny flat a possibility? Parking the teenager there might be a solution...

 

I wish... but I'd kill for a second living area ATM.

Existing house is too far set back on the block for a granny, and I can't get my head around re-designing the new build to incorporate a second kitchen and an additional living area ATM either.

There just so happens to be an actual Granny who would and could make use of a Granny if there was one there... so you maybe opening a can of worms FredBear