PPOR or another IP

Hi everyone,

Long timer lurker, I am now in a situation that could really use advice from the good people of PC!

I currently own 2 IP (both are apartments), looking to buy another property but unsure if I should buy a PPOR or another IP. My situation and current reasoning is as follows

- 2 IP currently valued between $400-$500k, LVR ~80%, one is negative geared, one neutral. The neg gear one has increased nearly $100k in value. The other one I plan to hold.

- If I buy another IP, I am looking at Geelong, Frankston for something in the vicinity of $500k - $600k.

- If my next purchase is PPOR (which I am more inclined towards), I want to look for a house in good condition; though townhouse will do if a good one comes along. I would like to rent it out for a while to help with loan repayment; and move in at some point (currently living at home). My budget for the PPOR is $800k, I would like to buy in the south east suburbs and I am aware that I won’t be spoiled with options.

Even though I would like to hold both of my IP’s, I am also open to selling one that has increased in price (currently negative geared), because I think it’s unlikely to get much higher, for instance $600k for a 2 bedders, considering the oversupply in Melbourne (feel free to comment on this)

Could you please advise:

- Is now a good time to buy my PPOR given the peak in Melbourne and my preference is south east. And if so, with my budget I am open to a townhouse (as small as ~300sqm, better if bigger), would you advise against buying such small land?

- Is it a good time to sell my IP? It would be ideal for a first home buyer ( 2 bedrooms apartment, good location in south east Melbourne) and I anticipate starting July 1, this market (small and medium apartments) will be hot considering the help FHB are getting.

-Anything else I might have missed

Thanks

 

1, crystall ball material
2. same, but it would also depend on your istuation
3. yes, heaps.

 

Thanks @Terry_w, can you please give a few pointers on this one?

 

Any opinion you get will be pure speculation.

I think your main driver here will be your own personal desire to own the home you live in. You can make a case to rent the place you live in. But do not discount the value some people enjoy knowing that the dirt they stand in is their own dirt.

 

Market movements aside - if your borrowing capacity isn't excellent....and you have a desire to own a PPOR at some point in the future then I wouldn't add IP's to the portfolio right now.

Additional debt will reduce your servicing - so consider getting your PPOR now rather than accumulating a third IP and being told that you've hit a serviceability wall when you go for your PPOR loan.

Cheers

Jamie

 

Thanks @Ross Forrester, I didn't realize I was asking for too specific answers, as Terry has put it - crystal ball material

Likely I will look to buy a PPOR since I do want to own the place I live in.

 

That's a very good point, thanks for raising this @Jamie Moore. Now that's more logical to go down the PPOR path, and then draw out equity for a third IP in the future if/when serviceability allows.