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Need advice

Discussion in 'General Property Chat' started by Newyproperty, 27th Mar, 2016.

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  1. Newyproperty

    Newyproperty Well-Known Member

    Joined:
    11th Sep, 2015
    Posts:
    63
    Location:
    NSW
    Hi all.

    Just looking at some advice/ideas at what I should do next.

    Age: 30

    Current situation:

    I purchased an IP 16 months ago with a plan to do a knock-down rebuild. It was an area I planned to live and still do.The IP owes me 513k and it is 100% borrowed, secured by PPOR. My PPOR has around 500k equity. The IP is 2 mins from the beach and close major shopping centres and about 15 mins from CBD. I can see this being an expensive area in the not too distant future

    My PPOR has about 100k left on the mortgage and i estimate there's around 500k equity. The original plan was to, at some point, sell the PPOR and build at the new place. However, while this is affordable for me, I'd rather not have a largish (IMO) loan on my PPOR. Ideally i want to be able to either own the home outright or have a small loan.

    I'm keen to live in the area ASAP and was hoping in 2-3 years time i'd be in there or starting the build process.

    My thoughts:

    Option 1:
    Sell my PPOR and move into the IP. Sit the 500k in an offset account and save like a mofo for a 2-3 years. This might get me 50-100k extra. This would allow me to get into the new house quickly, but probably have a 400k mortgage.Once built I could purchase another 1-2 properties and and eventually pay the PPOR off.

    Option 2: Same as option 1, but buy additional IP's. This would allow me to gain equity while also paying down the principle on the loan (fully offset). While i may not build in 2-3 years, my equity would increase substantially. Buying 2 x 500k IP's @ 4% annual growth would net me around 200k in additional equity over 5 years. Plus the principle repayments on the original IP @ 2k/month for 5 years should get me another 120k in equity. I would probably expect that the original IP would have a value of around 600k or more by this time.This would put me close to making my first million.

    Option 3: Keep my current PPOR and buy another IP. Over 5 years I should have the PPOR paid off and the home would possibly be worth around the 680-720k mark - and I may own this outright. The additional IP would hopefully give me another 100k to add to this.

    Option 4: Ditch the new build. Sell the PPOR and move into the IP and have it fully offset. Do a small renovation and be happy in the home. From here I will have plenty of cash and equity to start buying IP's and building on equity.

    Happy to hear other peoples thought - i.e. what you would do.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
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    Location:
    Sydney
    What are you trying to achieve? Just to live in the area?

    Option 5 Rent in the area and rent out the main residence

    Option 6: Sell Main Residence to Spouse

    Option 7: Keep living in the current house and build and rent the new one out for a few years. Get some good deductions and then sell the current main residence.

    Option 8: Do any of the above plus keep investing.
     
    Gingin likes this.
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast
    The challenge here is that you are you.

    Others arent you

    All have unique scenarios and risk factors

    I jokingly say to potential clients with such broad value questions, did you ask your friends and relos if it was ok to get married to your spouse.................or to have a child.

    ta
    rolf
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
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    Location:
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    I bet many actually do.
     
  5. Newyproperty

    Newyproperty Well-Known Member

    Joined:
    11th Sep, 2015
    Posts:
    63
    Location:
    NSW
    I want to live in the area in a nice home but also build of a portfolio of IP's. I'm against renting, I dont like the idea of paying money for something i'll never own.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
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    Location:
    Sydney
    What about the fact that you could rent next door, save $4000 in tax per year and still keep your main residence CGT free?
     
    SirDingo likes this.