Sell 2IPs to buy future PPOR, or hold until market cools?

We have 2 IPs on Sunshine Coast (Bli Bli and Sippy Downs), each currently worth around $580k with $380k mortgages on each.

Our plan is to retire to the Sunshine Coast in about 6 years, as close to Sunrise/Sunshine Beach as we can get (a 2-3 bedroom apartment with water views, which are currently selling around the $800k+ mark). The region is in a significant growth period, and we are wondering about the timing of selling and buying in the same market.

For example, the 2IPs are not going to grow as quickly as the future PPOR would. We are worried that the longer we leave it, the bigger the gap will be between what we would get for our IPs and what we would have to pay for the future PPOR.

Any thoughts? Do we wait for the market to cool down a bit (e.g. when interest rates start to rise in a couple of years), bite the bullet now and ride the better growth of the future PPOR, something else?

Would love your thoughts.

Thanks

 

Do you have enough other assets to handle, say, another 10% if you dont buy the future ppor now?

also availability of stock. The current market seems to have fairly low stock so if its a future ppor you dont want to get in just to get in. If the finances allow, it may make sense to wait, risk a price increase but have more choice?

 

I can't comment on the growth of the sunshine coast. I've got no idea.... BUT if it's a hot market and you believe that prices are going to keep rising for a couple of years, I'd be looking for the future PPOR now, even if you don't intend to move into it yet. Do you have the borrowing capacity to purchase it AND hold the two houses?

This is what we did with the GC. About 18 months ago, we bought a home, but were not ready to move. It's gone up in value approx $300k in that time.

 

I don't mean to be cheeky or unhelpful, but any question beginning with "do we wait" is really impossible to answer. I have no idea what the right timing is.

What I have said to recent clients which might help, is that there will be a trade off: you can either (a) buy in a less heated market at a higher price; or (b) buy in a heated market now at a lower price.

 

If the market is rising, I'd be buying my PPOR asap, and selling the INV's when it starts to show signs of slowing - assuming you'll be selling the INV's one way or another. You want to hold as much asset as possible in a rising market.

 

It actually is. You don't know anything about the person, so it's not just a case of the price they will pay. It has to do with a lot of personal stuff as well. All you can really do is tell them what you would do in similar circumstances, and that is usually making assumptions of what those circumstances are.

 

If you're selling to buy then how much difference does it make?
Sell an IP with tax deductions to by a PPOR? Maybe seek accounting advice.

This is an assumption. May be true or not.

Did you do this by selling the only 2 IPs you had?
Probably not is my guess.

 

I think we are agreeing with each other?

 

Yep!

 

Haha, certainly not. You may have missed it. I said

 

Thanks @Trainee , I like that perspective - higher price but more choice.

Thanks

 

Unfortunately not @skater . We were going to buy the PPOR out of SMSF, however could not then live in it without transferring it to ourselves and paying stamp duty, etc. We would save on capital gains, but thought if we bought it by trading up the IPs it would work out better.

 

Thanks @Jess Peletier , however outside of SMSF, funds to buy PPOR and hold both IPs won't work.

 

Thanks @Piston_Broke. We have a pretty good eye on sales in the areas of the 2 IPs and our desired area, and have to keep looking further south than we would like in order to afford what we want. May have to bite the bullet sooner rather than later.

 

Thanks @Jess Peletier , however adding to the portfolio without selling isn't an option.

We could possibly look at accessing the equity in the 2 IPs now as deposit, but I don't think it would cover it.

 

Are you 100% sure? Who have you spoken to about it so far?

 

A wise man once said to me when I asked him the same question "is money a current struggle for you" to which I answered no and he said, "don't sell then".

I have to admit I only half took this advice over the years and in retrospect would have been better of if I applied it in every situation.

 

Most important is your PPOR needs to be perfect for you which might be a challenge. It may take a long time to find the one for you. Could be next week or a couple of years? My point is be ready to pull the trigger when you see it?

As for the 2 IPs, might be a chat with a lender or someone here who might know better. But I'm inclined to keep all you have as long as possible as long as it doesn't get in the way of securing your PPOR. Maybe you need to sell one now and do a bridging loan for the other when you get your PPOR, I think a lender is best to answer that.

 

It's been a couple of weeks, we've taken some of your suggestions (thanks @Jess Peletier, @Rowan, @skater ), we've been to our broker and could get $900k property while holding 2IPs.

Now to try to find what we're looking for in that price range.

 

Brilliant! And $900k is a decent amount. Hopefully you will be able to get what you want with that.