Hi All, I am a new comer to this forum. I'm having a tough time deciding between these 2 choices: 1. Buy Single IP in Mount waverly \ Clayton \ Chadstone (or) 2. Buy an Unit in Carnegie \ Murumbeena + IP in Springvale Both work out to nearly the same amount for which I have a loan approval. If i go with option 2 , I would rent the unit and stay at the Individual property. Got just 1 kid for now who is 3 years old. Good schools will be a need in the future. Please share your views on which option would be good.. considering capital appreciation. Thanks in advance for your views and thoughts.
This is a bit hard to answer. In general, units are less attractive than other options. The reason is that unless they are in ruins, units have less scope for capital improvements than other options such as houses and terraces. Also, units have owners corporations, some good, some bad. I do not know about the Mount Waverly et al option type, so I cannot advise on the unit-house aspect. I just realised that you use the term "individual property". The usual meaning of IP is investment property. By "individual property" do you mean a house or the like, not a unit? Call the IP a house. If so then I'd go with the second option. Get the biggest P&I mortgage that you can for the unit, and the lowest P&I mortgage for the house. Depending on the rates, I'm tending towards paying off the house as quickly as possible, with minimum unit mortgage payments. The reason is that the unit mortgage interest is an allowed tax deduction. If you can get a good rate with an offset for the house, take it up and park spare cash in the offset. A redraw is a good alternative. Having cash aids cashflow. In general, diversifying is good, allowing risks to be spread and income to be varied. If you have just one IP then everything is in one place. Two properties means that you have flexibility. I cannot comment about the merits of the areas you cite. If possible, buy structurally sound ruins that need renovation. This keeps initial costs and council rates low. I've renovated a few properties this way, and all have worked out well. For the house, painting, electrics, gas and carpets should be done before moving in. They can be done after, but it's a pain. On two renos the carpet was ghastly, so I ripped it out and painted, did not need drop sheets.
