My story so far, and a big dilemma - what am I doing wrong? Advice welcome!

Discussion in 'Investor Stories & Showcase' started by poby, 31st May, 2020.

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  1. poby

    poby Well-Known Member

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    26th Apr, 2020
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    Location:
    Sydney
    Hi all

    My story is nothing spectacular, unlike some of the threads I've read in this section of the forum.

    Currently I'm 37, married with one child.

    In 2012 we bought a 2 bedroom apartment in western Sydney for 360K.

    We lived there for 2 years, then rented it out for 500/week.

    In 2014 we bought a 2 bedroom apartment in the inner west for 780K. Currently there is 510K loan on the property, of which 90K is offset.

    In 2016 we then decided to get into property investing, and bought a 3 bedroom house in a satellite suburb of Parramatta on a 600sqm block of land, for 570K. It is currently rented at 420/week, with 417K loan (of which 110K is offset).

    In 2017 we sold the western Sydney apartment for 550K (190K more than what we paid). Paid some CGT as we were treating out 2014 purchase as the PPOR.

    In 2018 we wanted to buy another IP around the same area but prices had gone up 100K+. We looked elsewhere and purchased a 3 bedroom brand new townhouse in the middle ring of Melbourne with good access to CBD via train. We paid 600K for it and it is currently rented at 430/week, with 530K loan on the property (of which 220K is offset).

    Again in 2018 we moved to the upper north of Sydney for work, rented out the inner west apartment for 750/week, and are renting an apartment ourselves.

    So currently we have 3 IPs generating income (one of them PPOR for tax purposes), total 1.45M loan (1.03M of which is not offset), income 1600/week. We have 420K cash in an offset account offsetting the 3 loans.

    That brings us to the next big step in our lives - the purchase of a PPOR in the upper north (Pymble/Gordon/Killara/Lindfield/Roseville) area. We like the area because of the leafy family friendly surroundings with good public schools, but also it is reasonably close to where we work (I work in the northern beaches and my wife works in the Macquarie Park corporate precinct).

    It is a wealthy area so of course properties are expensive. With 420K in cash we have a 1M pre-approval, so our budget is around 1.3M. But we just can't seem to find a place that we like for that price.

    Maybe we have expensive taste, but to find a 3 bedroom PPOR that we'd be happy with for many years, we need to pay around 1.6-1.7M.

    So the dilemma is whether we sell the inner west apartment or keep it. It will probably fetch around 1-1.05M in the current market, which means with a 530K loan left, we would free up at least 470K, and our cash holding would become around 890K or so, which wound enable us to purchase a 1.6-1.7M apartment.

    However giving up the PPOR-turned-IP generating 750/week income is a tough decision. No other IP we have brings in that much rental income, both as an absolute dollar amount as well as a percentage of the purchase price.

    We saw a 1.1M apartment recently that just about suits our needs but won't be a PPOR we'd be proud of owning.

    So what would the seasoned investors here do? Buy an okay-ish apartment we can currently afford and keep all 3 IPs for the sake of a stronger future financial position, or sell the PPOR/IP and buy a PPOR that we'll be happy with for a long time at the expense of selling off a good IP?

    Would appreciate any tips!
     
  2. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    So much in a short time, feels like too much to me.

    I'm interested in hearing what other posters say. Just a word, you can buy a decent home on decent land for the 1.6m mark, if you try North Epping. It's close to Macquarie but not Northern Beaches though.
     
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  3. Trainee

    Trainee Well-Known Member

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    West pymble / st ives or further north (turramurra / warrawee)? A few (not much) older houses possible <1.5. Realistically if you want a newish house it will have be across the forest.

    really doubt a 1.6, 1.7m apartment would outperform a house anywhere near that area, since you are thinking financially as well.

    be honest with yourself. You are not trying to think like an investor. You want lower north shore and you want new.
     
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  4. poby

    poby Well-Known Member

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    Location:
    Sydney
    Thanks.

    I know there are places around the northern Sydney region where I can buy a house with a decent block of land for 1.5M, which will most definitely outperform apartments. However neither of us work within walking distance of a train line, so the upper north region is ideal for us, as it gives us both <40 min car commutes.

    With an investor hat on, it makes perfect sense to keep all 3 IPs, and buy the 1.1M apartment we can afford.

    However it's a toss between sacrificing the now for a better future, or living in the now. We were leaning towards selling the inner west apartment recently, saying we should live where it makes us happy rather than living in a small dark noisy apartment in our 30s and 40s so we can end up being wealthy 80 year olds..

    But we don't want to make the wrong move and buy an overpriced apartment that will stall our financial growth. So currently we are thinking about a house in North Turramurra/St Ives where 1.5M freestanding house is possible (will have to sell the inner west IP to afford this).
     
    Last edited: 1st Jun, 2020
  5. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    This sounds reasonable. You could buy your house in North Turramurra/St Ives, and if worse comes to worst and you are too stretched financially, you could always sell an IP or 2.
     
  6. skater

    skater Well-Known Member

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    There is nothing wrong with taking money off the table to buy the home that you want. Go a home over an appartment every day of the week. From the sounds of it, you are on a large income, so you’ll buy more IPs later on.
     
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  7. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    I'd say buy the house, given you have the resources. It's another form of investment as you'd have land. Rather swap an existing unit for land, than buy unit to live in.
     
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