Moved to a new city, what to do?

Hi everyone,

I just wanted people's opinions on what they would do if they were in my shoes.

A little about me:
I'm 25, got my first house in Perth at 23. I used my first home owners grant and lived in the property for six months to get free stamp duty. The property is worth about 360-370k. I owe 250k on the property (30k equity), its rented for $300 per week and i also have 50k in my offset.

Things happen in life and now.....

I've moved to Sydney. Currently paying $300 per week for rent (sharing), will be own moving into my own place in January which means rent will be $550-600 for a one bedroom apartment. I'm currently earning 115k a year

Now, here is where I'm not sure what to do next year:

1. Continue renting an apartment to live in for $550-$600 and save up for a 20% deposit and eventually buy an investment property in Perth for 450-500k

2. Buy a one bedroom apartment in Sydney for 550-650k as my PPOR using equity+money from offset

3. Rent $550-600 per week and just keep putting money into my offset until I can pretty much pay off my mortgage. I work for a private company so,just a tad worried what would happen if I was to ever lose my job

I'm not sure if I should be doing option 2 as I've heard if I draw the equity from my investment, it'll cause tax complications as that money will be for my personal use, not investment.

Thank you in advance for sharing your thoughts/ideas

 

At your age I would be accumulating assets and not worrying as much about paying down debt given your relatively high income with no “life liabilities” e.g. wife not working and young kids. By controlling multiple assets you are better positioned for the future but yes, option comes with tax implications.

Provided you can satisfactorily get around these by getting some tax and structuring advice, I would be looking to get into another property while you have the ability. It can dry up quickly so strike while the iron is hot.

My only caveat to that would be that if you plan on upgrading house size for family reasons you should have a think about that too.

- Andrew

 

Hey there and welcome to the forums

Have you spoken with a broker about your scenario? Knowing exactly what things look like from a borrowing perspective can help give clarity as to strategy quite quickly.

A general comment though - I wouldn't save a 20% depsoit for an INV proeprty while you don't have an owner-occ house. I'd be much more inclined to use equity if you wanted to buy another INV.