What strategy / asset would you choose for first purchase? Rentvest Vs PPOR in regional area?

Discussion in 'Investment Strategy' started by Maychi, 4th May, 2022.

Join Australia's most dynamic and respected property investment community
  1. Maychi

    Maychi Member

    Joined:
    2nd May, 2022
    Posts:
    7
    Location:
    Toowoomba
    Hey PC Family,

    Help please - question on PPOR vs IP strategy for first home purchase.

    Context: based in Toowoomba until 2028 (6 years) for husband’s work and we have a baby, planning for at least 1 more (potentially upto 4 total by 2028), early 30’s, FHB, on one income until I complete my masters end of 2022. Will either stay in Toowoomba or head to Gold Coast after 2028 (depending if it makes sense for work / finances / kids). Renting a furnished 2 bed 2 bath unit in great lifestyle location. $80K deposit saved and taking $20K from FFSH.

    Our financial advisors advised we could purchase a house for $800K conservatively, save $20K for additional costs etc. Don’t need to build a property portfolio for wealth as we will be able to retire comfortably on our income, but would like to consider having our PPOR, our downsizer and one IP in future.

    Aiming to grow our family. Open to consider rentvesting. Love our rental, but not much space / zero storage for family. Neither hubby or I can imagine what kind of house we might want as our family grows, so finding it hard to buy a PPOR as I’m sure we may need to upsize later down the track, although we don’t need 4 bedrooms right now.

    Currently considering the below 3 properties as either PPOR or IP:

    1) DOWNSIZER - A unit is for sale in our building, they want $600K (2 bed 2 bath, same unit as ours but couple floors up, excellent park views, walking distance to everything). No other high rise units in the area as it’s a heritage listed protected area with lots of 100 year old character homes, so it’s a scarce and high quality asset north east facing, big large windows, renovated etc. Tennis court, pool, undercover garage. This would be our dream downsizer home. But not sure it’s great for our first home purchase unless we rent it out and rent a bigger home in the area. We would keep it long term, and it would allow us to stay in the best school catchment area if we ever moved to a different suburb. If we rented it out it would likely be $500/week.

    2) ASSET - beautiful 4 bed 2 bath home with good yard size (519m size wise) located in Kearney Springs, built in 2017 and being sold by the owner / architect. Looks perfect and highly functional as our PPOR for the next 5-10 years. Asking for $750-790K. Unsure about the location but further from hubby’s work, not walking distance to anything. Apprehensive about buying for the asset instead of location. Not in the school catchment we had hoped.

    3) POTENTIAL - 4 bed 2 bath newly renovated home 520m, in the suburb we currently are in. Really great asset as a Reno, happy in between option (agent suggesting $900K in brochures). Expressions of interest type sale, the owners are happy to rent it back so we can stay in our current unit and have it as an investment property rented to current owners.

    Other thoughts - find land in the area, and build our own dream home on it type thing, or Reno an old home. But both would needs funds / borrowing. Or just buy an IP elsewhere and rentvest.

    Questions:

    - Which property / strategy would you go for?
    - Is it a good time to buy now with interest rates up in the air and pricing likely to cool off (currently very hot market with competitive buyers), been advised to wait 12 months until we are both earning so less stress on husband
    - Buying a PPOR seems difficult when neither of us are big visionary types, so we don’t know what we’ll really want or need til we’re there. Also not sure about location, we’re just sticking to this suburb as it’s blue chip (east toowoomba). Should we instead stick to an IP and rentvest?

    thanks in advance for all inputs.
     
  2. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    Even if you could retire on your income (dont really know what that means - some sort of government pension?), do you think it’s worth doing something to help your kids get into properties when they get older?
     
    Maychi likes this.
  3. Branden

    Branden Well-Known Member Business Member

    Joined:
    12th Aug, 2018
    Posts:
    627
    Location:
    Blacktown, NSW
    Rent-vesting is an extremely viable option for many FHB's wanting to get into the property market but are unable to buy where they live due to affordability. Your circumstances are slightly different as you have a couple options to choose from but as you have eluded to you may not be living there long-term.

    I personally would prefer to take the rent-vesting route so I could begin building my asset base. Then further down the track once you have confirmed where you want to live long term you can return to looking at buying a PPOR particularly as your borrowing goes up with two incomes.

    Finally, I believe the best time to buy property is today (when the right property presents itself). Many times people sit on the fence and wait for the perfect time to buy, there is rarely a perfect time to buy nor can we typically identify when this is until after it has taken place, uncertainty in the market creates opportunity.
     
    Investor1111 and Maychi like this.
  4. Maychi

    Maychi Member

    Joined:
    2nd May, 2022
    Posts:
    7
    Location:
    Toowoomba
    thanks @Trainee, thats a great POV. Moreso something our financial advisor told us after he did a 30 year cash flow projection, we would have enough in our superannuation to supplement our yearly expenses for 30 years if we retired at 65 years old, based on only 2 kids. He was discouraging building a property portfolio, and putting excess in a shares portfolio instead for diversification (PPOR, shares, possibly 1 IP was his recommendation…). After reading a lot in this forum the past few weeks, I trust the brains here for advice on property more than our advisor
     
  5. Thebiglebowski

    Thebiglebowski Well-Known Member

    Joined:
    27th Feb, 2022
    Posts:
    189
    Location:
    Adelaide
    Just be aware they have a vested interest. The more you invest in shares/super the more they can charge if using an fee based on assets under investment.

    if you deploy your capital to property that is less funds under their management.

    Just food for thought.
     
    Maychi likes this.
  6. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    Nothing inherently wrong with PPOR, 1 IP and shares, but.......
    You have to decide whether that's enough for you. People here tend to be biased towards property, though that's because there are results to prove it works. Whether you think that will continue into the future is up to you.