Melbourne vs Perth?

Hi guys,

We have just purchased our first IP in Brisbane and I couldn't recommend more the services of @Andrew Allen and Amanda Higgins from his team. Extremely happy! The search is currently ongoing in outer west Melbourne for our second property. Hopefully that will be done in a few weeks time.

After these two purchases we will have some leftover funds for a third property. We are contemplating whether to buy in outer Melbourne again or wait a bit longer until Perth starts recovering and buy there.

What do you think would be a better option? A benefit of buying in Perth would be that we can make it our PPOR (and then rent out) and take advantage of CGT concessions. However this is not certain due to my work. On the other side, if we buy in Melbourne, we might be able to buy in Perth in a year or so using the equity from the three properties (if there is enough growth in a year) but we might miss the bottom by then.

Thanks a lot!

 

w00t!

Missing the bottom is not going to be a big deal. When Perth starts to move, it starts to move very slowly at first. You will have at least 12 months to jump in.

 

Hmmm, sounds like we might have another buying opportunity in Melbourne.

What I don't like in both capitals are poor yields.

 

Congrats. Where and what was the first purchase?

What area in Perth are you looking at? Will you have issues renting it?

 

Hey mate, we bought in Nudgee (Brisbane). With Perth, I'm not really sure really. I like Bayswater but the yields are very low. Still need to do a lot of research. Definitely buying a detached house. The problem is that all better yielding suburbs are far out so CG might be compromised. Not like Brisbane, where you can buy 4.5% yield within 10-15km fron cbd.

Renting out might be issue in the current market, however I would make sure that improves before I buy.

 

If it's gonna be a ppor eventually then buy where you want to live. Even if the yields crap.

 

Congrats on your purchase!
Personally, I think having a PPOR is overrated. I'm in one now, and the only reason I'm staying put is because it's cheaper than renting.

The problem with buying an investment property to be your future PPOR, is that emotions tend to make the decision.. AND, you don't know what life might bring.

e.g. You might decide to leave Perth and live/work elsewhere, or you might end up having 4 kids, instead of the 1 or 2 that you might have originally planned for and now you need a bigger house?

 

Melbourne is peaking, careful with too many eggs in one basket scenario. Perth is bottom(ing), keep an eye out for good bargains.

While everyone loves to buy when it starts moving, bargains can only be had when the market is desperate. Buying 10 to 20% BMV will make up for 5 to 7 years of holding costs (depends on the purchase price and yield ofcourse).

Bottom line is buy in Perth when you find a good bargain. Congratulations on the Brisbane purchase.

 

You see that's the problem.. We currently live in regional WA, however my partner is temporarily in Perth so she would be able to make it ppor if we buy within the next 12 months. After that we might not move to perth in another 6 years to reset the 6 year rule. It all depends..

 

5-7 years of no CG and low yield may be a problem though

 

Hey, congrats!! Been reading your journey here on ye olde forums.

Great to hear that you jumped in!

 

Thanks mate. We are slowly learning. So excited that we started the journey!

 

Yes, I agree, life can be unpredictable. If I do buy PPOR though, we would convert it straight away to IP and use the 6 year rule to reset the CGT exemption. So technically it would be just another IP with the benefit of being able to have CGT exemption on upon sale.

 

No, you can't do that.

PPOR means principal place of residence, so you can't simply buy a property, call it a PPOR and immediately rent it out. You will have to move in and actually live there first.
Marg

 

Yes, I'm aware that I need to establish it as my primary place of residence first.

 

Try and establish the ppor that has the best chance of capital growth so it's tax free when you eventually sell. As marg said you do need to live in it first though. Not sure if it's a week min or longer regarding the rule.

 

In my understanding there is no minimum period specified, as long as you can establish it as your ppor.

 

You may need to prove it if ato ask. Happened to me many years ago, I had to show telephone bills, gas bill etc to prove i was living there.

 

Nice, a month or two of living there will do it.

 

Great advice i got many years ago in the share market "people lose alot of money trying to pick tops and bottoms" like what @Perthguy said its not bad to miss the bottom. If you jump in on a rising market your doing well.
My 2 cents