VIC Should I sell?

I am planning to sell my owner occ property (4 bedroom) in Endeavour Hills, Melbourne due to many reasons, mainly personal like not comfortable with too much debt and also too far from school and public train station. Currently school drive is more than 35 mins sometimes in mornings (due to traffic in M1 and M3) and similar in the afternoon.

And planning to put in the market early next month. Today just read in the news Melbourne market is not great.

I purchased in March 2021 (for $752k) when market was hot, and potentially have paid higher than I should. So not expecting too much gain either.

The aim is to purchase something near the school suburb for ideally around $550k to manage debt and financial goals. Even if it is older style 60s, 70s apartments without lift.

Should I be worried about the potential sale? Or not worry about market trends due to personal reason of selling. I think what I am asking is, is it ok time to sell or really bad time.

 

Well, it all depends on your goals. Just because you read something doesn't make it so.

 

You are selling and buying into the same market so does it matter? If you sell in 2 years and the market is rising or has risen then you are buying back in to the same market! The financial cost of moving will be the selling costs and buying costs and the removalist. Could be substantial. I would be weighing up whether that is worth it and not worried about the market itself.

 

Thanks for your reply.

In relation to Financial cost, the cost is for agent fees/conveyancer etc – around $20k plus stamp duty of around $30k. Moving will be hoping around 1k max.


My current loan balance is around $530k and the new loan balance will be around $330k (After downsizing). I am trying to mitigate the buying and selling cost by looking at the reduction of loan balance. As Aim is to be mortgage free for owner occ in next 5 years.


Just brainstorming these things in this forum, as I literally don’t have anyone to discuss all these matters. That’s why I feel I made a mistake buying in 2021 and not understanding my financials goals.

 

I suggest that you look very carefully at the market where you want to buy and see if the maths works. While driving for 35 minutes is a bit of a pain, it may cost less than moving. Also, work out how the timing will be. A house is generally better for a family.

Do you sell or buy first? My preference is to sell first so that you know your budget. Having a long settlement period or being allowed to rent at the current place are options. Bridging finance may cost.

Can you please post your income?

 

I have spoken with our banker and have advised on bridging finance. We are planning to secure a buyer first and then put an offer for the apartment. Combined Income is around $185k Gross/annum. We have other 2 investment property in Werribee, hence dont have any more borrowing capacity.

The drive is literally killing us, as we thought we could manage, but after Covid we feel traffic in the road has increased a lot. And the driving in M1 etc is taking away too much energy and I am unable to concentrate on taking new responsibility at work to increase my income. As we have 2 kids in 2 different school (in same suburb). We cant change school for various reasons (Younger child has autism etc).

Plus current loan of $530k, which i am not comfortable psychologically at all. In my daily short walks, i always think, I am paying the bank too much interest, specially when each dollar I earn feels like i am earning with my blood and sweat. I as thinking of reducing my loan by round $200k by this move and pay off the mortgage faster (thats one of the main goals as well for the move). Downsize my mortgage.

 

The reasons above are valid. Apart from the maths there's always the sleep at night test and how one feels. A $200,000 reduction in the mortgage will knock payments for a six, and make life much easier. Think carefully before buying an apartment. Cashflow during the move needs to be managed well. A PPOR P&I rate of about 6-6.2% should be possible.

 

Your points are valid. Have you considered leasing the Endeavour Hills property and rent yourselves closer to the school? This way you don't have to sell the PPOR for a loss (or negligible profit) and also have the interest tax deductible moving forward. You can always come back to teh PPOR or sell it within 6 years CGT free.

 

You are prepared to lose $50K+ to reduce your loan by $200K? It doesn't make sense to me.

Can you buy a unit closer to where you want to live an rent out the current PPOR? Once the school commitments are over, you can move back.

 

I am reluctant to rent out this property considering this is relatively new (13 years) and in good condition. As is two floors and tenants in my friends property made a mess of the stairs with kids jumping in the stairs and upstairs. Renting would have been best option in ideal world, but due to the house being 2 stores, am reluctant to go this pathway. Plus Rents are also only about $600/week.

 

I will use the excel sheet again, as last I did some calculation, I was coming ahead mathematically and will have less travel time too. But your post making me think to do some calculation again.

 

All but one of my tenants have been excellent - rent paid on time, looked after the properties, lovely to deal with, no insurance claims. People with more rentals than me for longer may be able to add to this picture.

Renting closer to the school and renting the current PPOR means that there is the possibility of selling the PPOR up to six years after you move out and not paying CGT. If the current PPOR rents for about $600/week this is around $25,000/year after costs. This means that if you can rent for around $500/week you break even and keep options open.

 

Let me get this straight, you want to downsize to a unit (2 bedrooms?) with two kids, one of which has autism? While that may work in the short term, think about when the kids get older. They will want some privacy and to not be sharing a room. If you must move, I think the suggestion of renting is a very good idea, also as @Burramys has said many tenants are great tenants.

 

Woe and alack, I missed the 2BR aspect, a significant point. Thanks Skater. The new residence should have three bedrooms.