Outgrowing Camberwell villa unit - Best strategy moving forward?

Discussion in 'Investment Strategy' started by JimBass, 30th Jul, 2020.

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  1. JimBass

    JimBass Member

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    Hi guys,

    Just looking for a bit of strategy advice!

    We bought a 2 bedroom Villa unit in Camberwell a few years back now. Love the place but it's starting to get a little small with our two year old daughter and we plan on trying for a second in the not to distant future. In hindsight maybe we would have been best to have not purchased given we've grown out of it so quick but what's done is done.

    We're in a lucky position both having very secure full time jobs, I'm an emergency services worker and partner is in heath. We purchased our villa with help from a parental guarantee and I've added the details below incl our incomes etc.

    • PPOR - Owing : 695K Current Value : 820k
    • Incomes - 200k combined income before tax. Very safe jobs.
    • Savings - 40k.
    • Expenses - Don't have exact figure but very low (One car family (no loan), No cred card, live fairly frugally)

    It's hard to make a decision on our next step and I know something has to be decided on in the not to distant future if we are to have a second child.
    I see us having a few options ..
    • Sell our PPOR Villa (820kish) and upsize. We'd like to stay in the general area, so looking at suburbs like Burwood, Box Hill South etc
    • Rent out our PPOR and rent a larger property in the same general area allowing us to continue to save or potentially do this whilst also purchasing an investment property.
    • Look at purchasing a 3 bedroom ppor a suburb or two out for around the 800-900k range but keep our original PPOR as an investment. (No idea if this would be possible and how much more we would need to save etc, we would have access to parental guarantees if needed)
    I've spoken to our broker a few times but i'm not sure how investment savvy he is. I feel like it would be a missed opportunity if we sell our current place as it has a lot of potential for long term growth.

    Cheers.
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    How much did you buy it for?

    The Y-man
     
  3. The Y-man

    The Y-man Moderator Staff Member

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  4. Morgs

    Morgs Well-Known Member Business Member

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    Hey @JimBass have you done the numbers on each of your scenarios to determine if they're all feasible?

    You will just need to make sure the numbers work in case of options 2 & 3 and making sure the finance structure suits.

    We've rented where we wanted to live in so we can keep funds invested in the past and has worked quite well for us but we've been very active on the investment front. Just a matter of looking at the rent vs. buy equation in your own situation and the more strategic picture.
     
  5. kaibo

    kaibo Well-Known Member

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    Be prepared to go down to one income especially thinking about 2nd soon. Don;t think you would want too big a debt to hang over you but having your own place with a yard for Kids to play on is awesome(That has been a god send with Covid)

    I would tempted to rent until 2nd child gender known for only one reason and that would be if you had another girl then should buy in Canterbury Girls Secondary college zone

    But I assume you will buying in the low to 1 mill price range and it's all about school zoning for lifestyle and investment. If buying Box Hill South make sure Box Hill High school zoning > Mount Waverley secondary (A lot of Burwood in this zone) > Ashwood.. Some of Blackburn and Blackburn South is in BHHS zone as well so have a look there as well.

    Should consider Doncaster East as well as well regarded primary schools and East Doncaster Secondary College is pretty good. A lot of houses there built late 80's and early 90's on around 700 blocks (some can't be subdivided though) but heaps of parks etc. and a good place to bring up family (Just a bit fr from train and not as many public transport options)

    Just some examples here of typical places
    86 Polaris Drive, Doncaster East VIC 3109 | Domain
    39 Roberts Avenue, Box Hill South VIC 3128 | Domain
     
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  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Id Start with a valuer shop.

    To some extent this will determine the possibility of the options, since savings are limited, you will need to stretch the equity a long way.

    5 to 10 % variations in vals are common, and in some cases 15 to 20 % possible

    ta
    rolf
     
  7. Zimplestiltskin

    Zimplestiltskin Well-Known Member

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    I'd rent it out and rent another property that is suitable.

    That way you can be comfortable and you can see whether child number 2 comes along before making a decision on another PPOR.

    You can also rent in other more affordable areas to see if you like it before settling into your next home you likely stay in for the next 15 years
     
  8. hammer

    hammer Well-Known Member

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    Can you add an extra bedroom to your Villa @JimBass ?
     
  9. Robbo80

    Robbo80 Well-Known Member

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    Yeah check out how much you can borrow. Dont think its doable without parental assistance.
     
  10. craigc

    craigc Well-Known Member

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    Or sometimes up to 30% variations! :mad:
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    42 % is our practice record :)

    Same house same week

    ta
    rolf