Possibly moving to the Gold Coast - better to buy, right?

So I'm having another mini life crisis at 35 years of age. After moving to Melbourne from Sydney almost six months ago for a new job, I've finally decided I hate it (the job - not Melb). So now I'm looking at making another big leap and moving to the GC. This is because I want to follow my passion in the theme park/tourism/leisure industry, where I initially started my working life. I've been thinking about it for a long time, but then this job in Melb came up. I'm only renting in Melb, so should hopefully be able to cut my lease short.

I own two investment properties, one in Adelaide and one in Brisbane, and apart from that I've just been rentvesting. Based on the research I've done, it seems like the rental yields are quite high on the GC (looking around Southport and Broadbeach... close to amenities, not right in Surfers, and access to light rail etc). I could sell all of my share holdings and go ahead and purchase a property with cash (max $400k preferably). I have also been speaking with a buyers agent who came highly recommended to me as I feel like it's a tricky market to understand. I also want something that could either make me money if I sell if things don't work out, or at least not lose money on.

Yes I know I could rent first to see if I like it, but I'm really feeling like just taking the plunge and going ahead and purchasing a place outright. Appreciate any thoughts on this strategy. Please help me PropertyChat! It makes more sense to buy rather than rent on the GC, right?

 

The smart play is to rent first- but you already know that

 

If you do decide to buy, why not buy something with a bit of renovation potential (even if it is just a paint and tidy up).
That way if you do decide to sell you can complete the Reno quickly and atleast get all your money back, potentially make some.

 

Ooh, I like that - flexibility. I was wanting to hopefully borrow against the equity to put some money back into shares so I don’t lose all exposure. What would reasonable limits be? And would that then cause problems with separating for tax deductibility purposes?

 

Actually, that could be the issue. I might head up there without a job just savings (I’m working on things and have a few contacts, so would expect something to happen, but initially won’t be high paying). So I guess that’s why I was looking at buying outright. Then I can just borrow against the equity, which would be 100%, to purchase back into shares or other investments. Is that correct?

 

The way things are, you risk not being able to borrow against the equity.

 

The Job situation on the Goldie is quite different to that of Melbourne (can be hard to find work). You're probably already across it, but if not its worth keeping in mind if you're planning on a career change.

 

I've only ever relocated once (down to Melbourne) and I bought there... but not before renting for 6 months first. That gave me a good feel for different areas and allowed me to take some time to find the right deal. That could work in your situation too?

 

Yep some good advice. I guess I just wanted to avoid the whole renting then moving again thing. Plus rents aren’t super cheap (high yield) on the GC, whereas if I purchased outright there’d be minimal weekly outgoings, apart from body Corp if applicable and the usual charges. Could also look at buying a 2 bedder and renting out a room to help out for the short term. It’s definitely risky, I acknowledge that.

Yep, assuming I wouldn’t be able to borrow against the equity until I get a reasonable income again. Knowing my luck I’d sell all my shares then the share market will boom before I had a chance to buy back in with the equity.

 

Definitely, this is one option I’ll be looking at for sure.

 

Is that 400k your talking about currently invested in shares? Whats the CGT if you sell? Buying outright just because outgoing will are minimal is very short sighted. Whats more flexible, a 400k paid off place, or 300k mortgage with a similar amount in offset?

 

Mostly long held shares and an intl managed fund with divs reinvested over time. $40k in cash. I have about $30k cap losses to use too. Reasonable argument there. But I guess this is why I’m asking. What is the difference between $400k paid off PPOR that you can borrow against (serviceability dependent) and $300k mortgage with cash in offset?

 

Ability to borrow (especially if your unemployed, not just now, but in a few years?), tax deductibility if you buy somewhere else to live, CGT (300k long held shares, your capital gains will be more than 30k). No positives to buying a place outright, unless you plan on going to the casino with the offset money.

In your case, fairly young, you need growth. Better off just leaving most of the shares and just sell enough for a deposit.

 

But if I did that then I’d be paying interest on a mortgage that wouldn’t be tax deductible. Isn’t the idea to pay off your PPOR and maximise investment debt?

 

But then you can get dividend payment from share which depends on the percentage may be higher than mortgage repayment

 

And potential tax deductability if you ever move and rent out your GC PPOR in the future.

 

Whichever way you look at it, either buying ior renting at the moment on the Gold Coast will see you facing a tight market. Everything is gearing up for the Commonwealth Games in April, lots of employment in the construction phase and operation of the Games. Rumours of landlords getting over $1K per night during the Games. Huge influx of visitors will mean high employment in all cafes, restaurants, shops etc.

My suggestion would be to stick it out in Melbourne until June or July. Let the Games hype die down and give the Gold Coast time to settle down, and employment, accommodation and visitor numbers return to a more sustainable level. You will then be buying or renting into a more stable market.
Marg