Who's right - help please!

My husband and I are arguing over our next move and I'm keen to receive advice/opinions!

Our PPOR is an apartment with $580k owing and value around $930k.

We want to move to a house. We both agree we should retain the apartment and rent it as rent would cover the mortgage and then we would be up for outgoings on top.

However. To buy in our desired area would be 1.4-1.5M. We can buy a suburb away for maybe 1.3M.

Husband wants to buy at 1.3M which takes us close to max borrowing capacity. I want to rent and buy either 2 x $550k investments, or possibly 1 x $1M in a better location.

My husband argues that CG will outperform in the better locations, while I think building a property portfolio is more important in the long term.

There's probably no right or wrong? We both want financial security. Husband with a PPOR in a good suburb. Me with investment properties to create financial streams, while renting in the actual suburb we want to live in.

Thanks in advance for weighing in on a marital debate!!

 

There's no right or wrong, but I would go with this option (if you're excluding all other possibilities that you haven't mentioned).
Maybe start with one to get a feeling for it.

 

If this is the case, do the numbers both ways. Personally I'd prefer to buy investments elsewhere rather than buy into an inflated Sydney market - you've already got exposure there.

Do the numbers and see what's actually going to get you too financial freedom - it's my thought that an extra $1.3M of non-deductible debt is not going to do it.

 

I'd always be looking to invest until the investments can pay for the $1.3M house so you don't have to. It takes time but worth it in the long run. However we all don't have the patience of a saint so you could always delay the "reward" of the new house with renting in a nice place in the same area, then buy the investments. After a while you'll get a feeling for whats more important if your unsure now.

Plus the way the banks are lending here once you commit to $1.3M house your servicing may not allow you to buy any investments in the future. You can check this with a good broker, plenty online here.

 

As others have said, there is no definitive wrong or right here as it all depends on what makes you both feel happy, secure and non-stressed (financially or otherwise)

Benefits of buying the PPOR include security and stability (rather than being dictated to by a landlord on a 12mth average lease) ability to retain profits given the CGT-free status and let's not forget that you are buying into just over median price, so I would consider this low-risk in the current Sydney market (though it depends where and what type of property obviously!) It ultimately is a personal choice. Good luck whichever way you go

 

Once you being a PPOR into the equation then it is rarely simply a financial decision as emotions become involved.

I would hate to rent, and maybe have to move on relatively short notice if my landlord's plans change. Even worse while we had children in local schools.

But there is a third option. Sort of an each-way bet. Buy a PPOR, move in and establish it as your main residence. If you change your minds, you can always rent it out and rent elsewhere yourselves.
Marg

 

Both of you are right.

But as stated, happy wife, happy life.
Someone needs to remind your husband of that (but it can't be you)

 

Not a fan of rentvesting so I choose hubbie, but not because of his CG theory, that's just Dribble.

 

Why? They already have the PPOR. That will be under the six year CGT excemption rule.
Given that, I would buy two investment properties in two other states.

 

$500k on red

 

Not necessarily.

If they buy another property they can establish another PPOR. They do not have to decide which to apply the exemption to until they sell one or the other. Of course, they can only claim one at any one time.
Marg

 

Thanks for all the replies guys.

I am really leaning towards buying 2 x investments in other states. I guess I need to do the figures on it if I want DH to agree.

However he is now having a little tanty and saying we don't see eye to eye, let's not do anything and just stay where we are!

I wonder if I can buy an investment property on my own

 

Thinking about what I'm really asking, DH thinks we'll get better CG on a house in inner Sydney (inner west) rather than two cheaper properties interstate.

His argument is that the inner west is increasing at a faster pace than other markets, and it is.

My argument is that through rental returns we are using more than just our wages to pay down our debt. Just thinking out loud really...

 

Sounds like this thread belongs here...
https://www.propertychat.com.au/community/threads/first-world-problems.560/unread

 

I think you do that at risk of bringing on the beginning of the end of a relationship.

Couples can take a long time to get on the same page, takes time unfortunately.

For us, we have never rented & we both agree the home is also an investment, so it would be a no brainer for us to buy a home, so I think you both need to sort this out between yourselves and find a workable compromise. That would be my suggestion, there will always be properties to buy.

 

Ha ha. Aren't all investment dilemmas first world problems?!

And such a beautiful relationship tbh, I wouldn't charge ahead without DH. But I am itching to start doing something. DH is a little more conservative