NSW Sydney PPOR vs Perth Investment

I’m conflicted…I have two options. Accountant and one broker saying go with Sydney PPOR. Another saying go with WA. My gut feel was saying WA but now it’s saying go with Sydney. Thoughts?

1. Under the low deposit scheme I can get a 2 bed 2 bath unit in Sydney for $800k with only a 5% deposit and pay no LMI. It would be our PPOR for the next 1-2 years. We would take out a P&I loan and pay as much as we possibly can essentially forgoing “saving” and putting everything into this property to pay down the loan.

In 1-2 years (mostly likely 2 years), we will be moving to Melbourne. We would refinance Sydney property, use equity towards an investment property and change it to IO as this would be the only way the rental return would come close to being neutral. Ideally we would keep the property long term and rely on capital growth however since it was our PPOR we could sell it without CTG.

Our next investment property will either be in WA or we will buy our next PPOR in VIC depending on prices vs yields at the time – IO only if in WA. If we proceed with WA we would live with family for at least 6-12 months save another deposit to purchase in VIC. And if we don’t then we buy in VIC with Sydney equity money and when we have more in VIC we buy in WA.

I am worried in this scenario that a) we miss WA growth b) our Sydney unit doesn’t grow as much as we wanted as the growth has essentially just happened, c) we go from paying $480 a week renting to paying $740 a week mortgage and probably putting in an extra $760 as we won’t be “saving” anymore.

2. We purchase an investment in Perth. Around $500k with rental return of $500-$550. We would need to pay LMI and we would need to save an extra $20k as we just short…We also can’t borrow 105% so we are to use our deposit in cash unfortunately. At the moment there is only one bank that will do the cash as collateral in a term deposit however they won’t release it until you’ve built up enough equity for them to deem it safe. We continue paying $480 a week and we save as much as we can for the next year. We reassess in 12 months time and either continue what we are doing i.e saving or we buy in another market such as Brisbane or we buy in Melbourne for this place to become our PPOR when we move there in another year.

In this scenario we need $20k which we either need to save for or borrow of family (going guarantor for full amount is not an option). We are also paying LMI.

Thanks for the advice in advance!

 

You make money in property with capital growth .

Perth is going to have significantly more growth before Sydney or Melbourne do .

Perth .

Cliff

 

If I remember correctly, you can only rent a PPOR for up to 6 years before you incur CGT. You'll also lose any flexibility. What happens if you find something amazing that you love in Melbourne and want to buy that as a PPOR? You're suddenly paying CGT on Sydney

Dont quote me on this as I'm not totally sure

Not advice in anyway whatsoever

 

Look I didn't read your post in details so forgive me but I wouldn't be looking at expecting greater capital growth off a unit in Sydney then a house in Perth over the next few years.
Look of course we never really know for sure but we do know that Sydney's going down right now and Perth is going up

 

For free money I'd go with the Sydney property with no LMI. Buy something brand new that is ready now so no surprises. Or consider a townhouse or duplex further out that may have more growth potential
Note that if you want to refi and the property is still over 80%Lvr you may have to pay the "free" LMI back