PPOR WA or IP QLD

I think I haven't understood your point clearly. But, if one has plan to buy a few IP down the track, doesn't it make sense to buy a PPOR towards end? Buying it earlier in the game may reduce the borrowing capacity more than it would be with buying IPs. Correct me if I am wrong. Also, one can as well take advantage of equity generated in all IPs to buy PPOR towards/at the end.

 

In which case it's still better to buy a PPoR first as you're lowering your non-deductible debt and then obtaining higher leverage into a fully deductible IP debt.

 

No this isn't generally the best way to do it. I am not going to provide specific tax advice but by doing it the way you're suggesting you will essentially end up with a large non-deductible debt on your PPoR and smaller deductible debts on your IPs. Borrowing capacity can be tweaked using plenty of methods at the time of any purchase depending on what you tell the bank with regard to your intentions (intentions can always change later...).

 

Interesting thread,

As someone totally unfamiliar with Perth, can you please point me in the direction of some suburbs to look into for around the 300k mark ?

Cheers

 

My vote will be Perth. Mainly because "yay Perth" but also because it's a good time to buy here whereas Logan has been competitive for awhile and a townhouse probably has less chance of CG than a house in Perth

 

Thanks Westminster, we have decided to focus on PPoR in Perth. Now to find something that we can capitalise on! Tossing up established vs new build budget is around 500k looking in dview, palmyra, hammy hill, hilton, willagee

 

Again, if you're looking for short and medium term growth, I would stay away from new builds generally. Plenty of good established options especially if you are willing to do some renos

 

I agree with this, as long as you have enough funds to pay for the reno's out of pocket.

 

Hi. My vote is for Perth too. It's a great time to buy a ppor in Perth, it's at the bottom. You might not see much growth though until a couple of years so you might not be able to use equity and buy an IP for a while.

Also my advice is not to have too big a ppor loan that it'll impact your future investing.

 

Thanks Alex. Plan would be to hold for min 3 years hence why we will buy in an area that we actually want to live in which may mean we may not make as much cg as possible but I kind of live fr the moment and don't believe in being miserable just to make extra $$
Looking to borrow around 400k so not much
IP down the track would be bought using cash deposit not equity from PPoR

 

Should do! Im actually surprised you are all saying established. I was of the belief that value of end product typically equals more than land+build price, but I am not in the game so take all of your advice on board

 

Agree with this. You can fast track your CG if you can value add to the house and there are more options with an established house than a new house.
With established housing purchases you are paying mostly for the land and then some for the house - in some cases you are effectively getting a free house. With new products the house still has 'value' so that is factored into the price.
With new you do have less maintenance but if you have an inkling about DIY and happy to do some work on the house then established with a value add will increase your odds
If you want to have something that is new then I would consider buying land and building yourself

 

Hi Y Man!
I didnt mean a house and land package I meant buying the land then enlisting a home builder, still the same situation in your opinion?

 

Yes I would never go H&L package it would be buy land then source builder. But I do see your point re paying for the land essentially with established and little for the house. I see that so much with horse properties ( I'm in the sport ) people who buy a basic property with no facilities spend a fortune on putting them in that they just dont recoup when they sell, much better to buy properties with existing facilities that you can then upgrade

 

Better generally, but it means you have a lot of hurdles to overcome in actually trying to make it financially viable.

For example, you might overpay for the land, build a mediocre end product, or overpay on the build.

 

I'm pretty sure I saw tears in the eye of a horse lady when we inspected their property and saw the beautiful stables with heated flooring and wash down bays and said "Well we don't have horses but this would suit as a shed for the cars and tractors ". She was never going to get back the $300k she reckoned she spent on that
In the end we decided that converting a horse property to normal was not going to work as all the owners wanted their money back and most of their houses were way worse than what their horses lived in.

 

haha yes that's pretty standard most horse properties have disgusting messy houses as most horse people spend all their time outside, personally I am not that type my home has to be beautiful and immaculate