To sell IP for PPOR or hold in 2021?

Hi all, First time poster here.
Have some questions regarding our position and hoping the forum wisdom might help out!

Our Situation:

• We are a couple in our early 30’s, both employed permanently full time in decent jobs, currently renting.
• We have two IP’s, both bought and built off the plan, both tenanted.
  
• We want to buy a PPOR in the next year or so, but currently only have around 10% of the potential purchase price saved(7-900K total), where we would like to have 20% as we are looking for a 3/2/1 or better in the Oakleigh/Moorabbin area and want to reduce our mortgage commitment.
• Tenants in our Carrum downs IP (a 3/2/1 double story semi detached) are moving out in December for the first time in 7 years.

Should we be holding the above property (wait & save for another year for the PPOR) or sell it in this current climate? Mortgage on this property is around $400k, have been told we could expect $510ish if we sold now, although with Covid things are uncertain.

Likely to start trying for kids by mid next year and we worry that our borrowing capacity will be diminished once they come along!

Cheers

 

I'm in a similar position atm.

How long have you had the IP's? 7+ years I am guessing..

Maybe sell one IP and have some extra $$ and serviceability to go towards your PPOR?
Your $$ might be better in the PPoR as the interest will not be tax deductible like the interest on your IP's are..

I'm a beginner as well so keen to hear what some of the smart people think.

 

You mention 2 IP’s, is there equity available in the other one?
You could potentially use the equity for balance of your PPOR deposit & avoid LMI (pending servicing & don’t cross the loans), although noting this does not reduce your total mortgage commitments.
Consider the local market, are the properties in demand now or likely to grow in the future?

Also you mention these properties are both from new, so you are likely getting good capital works & depreciation claims so make sure that is in your assessment of the numbers.

Without knowing the numbers, but it is likely given the lengthy period of holding & current interest rates they are in a cash flow neutral or positive position after tax.

I realise no answers but more questions & things to consider @ACVH as only you can determine in the end.

SANF and what loans you are comfortable with is also important, so good luck either way.

 

Cheers for the feedback @Drifty and @craigc

There is some equity in both IPs ($100k+ each). Used equity in IP#1 to fund deposit on IP#2, so the loan is slightly higher on IP#1, which is the property we were considering selling. Not keen on increasing repayments on either IP, especially since the equity we pull out would not be tax deductible if we use to fund our PPOR. Loan on IP#1 is IO for another two years, but interest rate is quite high (4.09%). This property is around 7 years old, so depreciation is starting to level out.
Both properties are in good locations, but IP#2 probably has better growth potential in future.

We spoke to our broker today, who gave us an indication of borrowing power that has shown us that unless we can come up with an additional $130k, selling IP#1 is our only option to be able to afford where we are looking to buy.