Timing guidance needed, investing in ppor Bondi

hi everyone,
I've been enjoying this forum for the last couple of months.
If you feel like a long read- this is my situation.
About me;
Mid 40's woman, self employed. Worked hard building my company my whole life.
Good income- ranges between $100-180k, but being self employed, It's unpredictable, stressful,very sensitive to economic weather, and often has to require capital reinvestment. I'm primary earner and much of this income disappears in tax.

My background is that I recently decided it was a good time to sell- it was. My eastern suburbs apartment sold for almost 1.5 million ( bought for $750k 6 years ago) a couple of weeks ago, exactly as the negative gearing and bubble talk gained a lot of momentum in the media. Perfect timing .

After investing more into my company , and repaying mortgage, I'll be left with about $540-$690k - depending how much I decide to leave as a buffer.

Now I have to use this money very wisely to move into the next phase of my life.
I am separating from my husband, and have two small boys. We are on good terms.
We have all agreed on Bondi beach/north bondi for our move / moves. We are all in a rental for a while to buy time for decisions.

I understand the general recommendation to buy the ppor you can afford without trying to time the market.

Im Looking at PPOR being an older deco 2 br 1 bath around $800k -1.1 mill price range . The idea of minimal debt is very, very appealing. To own a place with minimal debt would help combat the stress of constant expenses with work.


My husband wants to be close to the children, which is great. He can't afford to buy , so I've been considering the idea of getting a big mortgage on $700-800 k 2 br, improving kitchen / bathroom, then leasing it to him (Advantage to me ; tax benefits, an IP, Advantage to him; well maintained property , better terms and conditions than other rentals, won't get kicked out, stable home near the children).

I would then be able to borrow a further $400k, add my $400k reserved funds, and buy another ppor as a stepping stone residence for a few years.

My thinking on this is;
Help husband, helps stability for children also
Gain an IP in a climate where banks won't loan for them
Potentially gain benefit from the last gasps of gearing on well located, older IP( BUT my accountant emphasizes that regardless of promises any changes could come in overnight , as did the changes in CGT ).

I think this scenario is a long shot though. (- unless you can collectively support it )

Stepping stone residence isn't ideal, especially in a softening market. Max debt isn't ideal in a softening market either.

Im prepared to rent for another year or two, but would like to be settled in a longer term home if feasible financially.

If you've read this far- thanks for your time investment It's helped me clarify my conflicting thoughts a little more writing it out. I appreciate your attention. The decisions made next will affect the rest of my life, and the time spent with young children is very fleeting and precious - I want it to be as easy and stress free as possible for them.

 

How did your husband not end up with enough money to buy buy you have enough money to buy potentials 2 properties?

I would not suggest renting to your children's father. If he stops paying rent your kids won't be impressed when you evict their father. To me IP should be business not personal.

 

He works very hard, and is self employed like me. He is the most reliable person I know. For the woman in a relationship to earn more than the man isn't a sign of poor character . It does actually happen that a woman can earn more than a man .
We rented together for years, and he paid reliably. He just isn't able to save a deposit, because , like myself, his money is often needed to reinvest. He also has never been convinced about the value of ownership vs renting ( i.e. Probably the right thinking for the cycle we are moving into now).
In this case the decision does have very personal angles. Doesn't mean it can't be a sound speculation though, especially since negative gearing could be very useful against my type of income.

 

Would the ATO have anything to say about you renting an IP to your husband?

 

Possibly; I realise even though it's a legitimate separation it would look muddy. Anyway I've spoken about it again to husband this morning and he thinks it's unnecessary , and that he will just sort out his own arrangement nearby.
I think we can both see it would leave me fairly short on the ppor investment needed.

Which brings me to point two- in a market that's most likely to soften from about March, should I lease a property for a year to gain me time to find a good ppor?
I guess if I run out of time I will have to . ( actually Husband can lease it, and we can stay there until suitable option to buy arises.)

 

Confused a little by the wording of he lease it, but both staying there. Raises all sorts of tax questions.

You may be better off renting until you find something you really like.

 

There are no tax implications from us leasing a property . It doesn't matter whose name it's in, it's not going to be a problem. If it's in his name it's a little easier for him to continue on there after we move out. I'm not talking about a property either of us own, just a local property we can rent .

 

Have a look at this thread first
Renting to your Spouse

 

..unless 'leasing a property ' actually implies leasing it out when I mean renting. In which case I'm confusing everyone lol. I do mean rent a property ..

 

Bargains in the Bondi market? (I need a crying laughing emoticon dammit!!)
Best to look for a vendor in your same situation.

 

I never said anything about expecting ' bargains' , and I'm not sure what you mean about a vendor in the same situation?

 

Ah ok, sorry I thought you were talking about buying still. Your post is all over the shop

 

Here is my opinion/advice - take it or leave it
If the boys are going to be with you, buy yourself a modest flat with minimal to no debt on it. Rent until the right time/ right flat / right price presents itself.
Your husband has already said not to worry about him. Listen to him - he's right. He runs a business and is a big boy. It will be easier for him and he will probably feel better if he can look after himself without unnecessary emotional ties.
I would check whether you are splitting funds fairly though (not here but with an objective professional). If you have the children, makes sense to have security.
It does sound like there is some enmeshment with you wanting to fix, solve and be responsible for everything which can be really annoying and a self-fulfilling prophecy - I relate.

 

It may be long D.T., but it's coherent. Just may be a bit too much going on for a skim read

 

I think you're exactly right Wattlido. A simple strategy is best too, especially in an uncertain, changing market. (Ps ; the division of equity is straightforward and fair, that's not an issue. )

 

I have to admit, the "I'm a 40 year old woman" part threw me off until I double checked the username.

 

Are you referring to the fact there's a See change on here? I realised after I randomly picked the easiest name I could - that's why I mentioned my gender

 

Did you wonder if seechange had had a sexchange and become seachange?

 

Well, he is a doctor right

 

Yeah he's quite prominent here.