What would you do? - moving for work scenario

I'm currently in negotiations and entertaining the idea of moving to Mackay for work purposes. I have a PPOR in the Newcastle/Lake Macquarie area which has done quite well growth wise and have also been looking to start my investment journey in the next 12 months or so. I've spent recent times educating myself, setting up financial frameworks and paying down personal debt.
My current PPOR -
$600-$620k likely bank val (appraised around $650k)
$435k mortgage ($50-60k in useable equity)
rent appraised $475 - $525/ week
I have a rough borrowing capacity around the $300k mark. Good chance this will increase with a better salary, wife returning to work and further debt paid off.My plan was to always turn our current PPOR into an IP if possible. It has good fundamentals moving forward. My plan would be to eventually move back to the Newcastle area however for career progression I'd estimate to be in the Mackay region for at least 2 years+. Chasing people's thoughts on what they'd do in this situation. I wouldn't necessarily look towards investing in Mackay normally however I also see this as an opportunity for some value ad if possible and the numbers stack up. I'd like to be a bit more of an active investor and the idea of cosmetic renos and being hands on appeals to me. My options as I see them:

1) Rent out PPOR, Rent in Mackay, use cash-flow and buy interstate/different location with good fundamentals
2) Rent out PPOR, Rent in Mackay until able to finance and then buy-reno-hold

Things to consider:
- would likely be paying $350/week for rent in Mackay
- This is roughly equal to a $300k mortgage
- Would likely pick something up for less than that and factor in purchasing and renovation costs
- Vacancy rates in Mackay region falling below 3% and lowest since mining boom
- Happy to be hands on, have some basic trade skills, etc
- wife struggles with the thought of investing interstate

I'm not necessarily saying Mackay is the best investment choice normally however I'd like to think moving there and needing a place to live presents us with some opportunity. Be kind. Cheers.

 

For me, Mackay is what I consider to be a mining town - therefore I do not invest there.

If I were in your position, I'd keep the PPOR in Newcastle, rent it out and rent a place in Mackay for 2 yrs while you're there.

IMO it is just an opportunity to lose money

 

Haha yes and this is what concerns me.. I'd like to avoid that if possible.

 

Agree with Alan here - regional towns can be risky and if you don't know them inside out then I would steer away.

Rent out your Newy PPOR while you're at Mackay. Rent a place at Mackay and you can look at investing in a location that will have a better opportunity to make money instead of losing money

Plenty of deals around SE QLD which you can pick up at a reasonable price with decent yield in which you can add value by cosmetic reno. How about travelling down that path instead?

Cheers,
David

 

I concur with sentiments above. Mackay has a large population of mining & related personnel that can & does influence the market. Ie. Drive up prices. It is also at risk from any future mining dowturn that would adversely impact values.

Having worked in the region in recent times, I personally would not buy there with any idea of investment or recouping costs. If it was a personal decision to permanently move there than that would be a different situation.

 

Thanks all. I do think regional areas do present some opportunity if correct due diligence is completed. My concern however is being relatively young my plan is to buy and hold for long term. My thoughts were that Mackay wouldn't be the best market for this strategy due to its volatility. I was however intrigued to hear people's thoughts on whether moving to an area would present an alternative opportunity for some short term value ad.

 

Please add a poll to save typing
I vote 1
....
2 only if @pinkboy says so

 

With comments above it sounds like a good opportunity to use the 6 year absence rule while Newcastle is rented out for a couple of years.
See Terry’s tax tips.

 

Certainly would be. An option I've considered. Thinking also it would be a good idea to touch base with an investment savvy accountant prior to the move to weigh up some options.

 

What did you end up doing Wilso?

 

Hey Archaon. Currently renting in the far Nth and have kept our Newcastle IP. In the process of settiling on our second in outer Brisbane.

Being on the ground in Mackay there is certainly some green shoots for the housing market here. There will be some short term opportunities. For our second however I wanted this to be a bit safer long term bet so went with Bri. The rental market up here has really tightened however. Only just seeing that transition into the sale market. If rents get stupid we will likely find a good value ad opportunity up here servicing permitting of course.

 

Tightened how so? Lack of renters or lack of rental properties?

I'm also looking to move from Newcastle to Mackay for work, small world, lol.

 

PM me if you'd like. Vacancy has fallen below 1% last time I checked. It seemed relatively easy to get a rental when I was first looking beginning of the year however when we moved it was harder than we thought.
Be wary of real estate searches as the agents up here seem to leave their listings online well after the place is taken. So they aren't an accurate representation of what is actually available.
The better half has gained employment working within an organization that manages a real estate section as part of their business if you are stuck.