Hi everyone,
I'm new to this forum and investing. I've done a bit of forum reading and read a couple of books but I'm feeling quite nervous about our first IP. I would really appreciate any advice
Here's our situation:
We're a couple aged 25 and 27 and have a home in Forest Lake that has about 250K worth of equity. We're now looking at buying our first IP for about 400-500K. We're thinking of buying in Forest Lake again as we would like a relatively new property and this is the band we can afford in – plus there will be the new train station this year. We're also thinking of renting it out to my mum if it suits everyone – she owns a IP elsewhere but is not going to buy in Brisbane for about 5 years so this could be a good opportunity for a good long term tenant. In 5 years time we want to have our PPOR paid off and then move closer to the city (kenmore/indooroopilly) and get a nice family home. We want to keep the properties we buy for good.I would like some advice on our general situation and:
whether it's a good/bad idea to have two properties in the same suburb
is it worth it to get a bigger loan and a newer house to have a better depreciation rate – getting a newer house might mean that the rent would be too much for mum so we would have to rent it out normally.
does it matter whose name is on our PPOR? we are thinking of having the IP in both names but the PPOR is in one name.
Is forest lake still a good place to buy? we've done well with our PPOR…
Should we see a financial planner?Also – what is "steve's book" that everyone always mentions?
Cheers,
MelHi Mel
Firstly welcome to the forum and I hope you enjoy your time with us.
Forest Lake is a suburb that has performed extremely well over the last 7-8 years so there is no reason not to buy in a suburb you know well as long as everything else about the property ticks all the boxes.
You mention that you are looking long term to buy your future PPOR in Kenmore / Indroopilly (great area by the way i am Chapel Hill) and that would want to keep you existing homes for investment. You really need to make sure that your loans are structured correctly as otherwise if you have off the Forest Lake property you will have rent which is then added to your assessible income yet the interest you will be charged on any new PPOR loan will not be Tax deductible.
Really this is the wrong way around doing things.
Very little you can do at this stage without incurring some form of cost in transferring the current property into Joint names however just need to work the numbers on the next IP as to see what names to buy the property in.
Also renting to your mother can be great as you will have a reliable tenant and will avoid the necessity of incurring property management fees however just need to make sure that you keep the rent at market rent as the property should still be an investment.
With Depreciation and Building Write off remember that even if the property is a few years old you will still be able to claim however would suggest you base your investing decision merely on the Tax deductions that are available.
The property should stack up on its own feet in all respects with the Tax deductions an added bonus.
Shoot me an email if you want a Residex report done on the Forest Lake property or any other property you are looking at.
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for the advice. We were going to set up our IP loan as variable interest only – but your comment does make sense about down the track when we upgrade our PPOR. How would you avoid this though? should we pay off both properties at the same time so that neither are paid off when we move to a bigger PPOR? Our PPOR is currently under a variable loan with 100% mortgage offset account.Thanks,
MeldreamerQLD wrote:Hi Richard,
Thanks for the advice. We were going to set up our IP loan as variable interest only – but your comment does make sense about down the track when we upgrade our PPOR. How would you avoid this though? should we pay off both properties at the same time so that neither are paid off when we move to a bigger PPOR? Our PPOR is currently under a variable loan with 100% mortgage offset account.Thanks,
MelMel,
You have an offset account. You could put all your money into this account and reduce the interest charges on your PPOR.
If you change your minds later you can just take the cash out of the offset and use it for whatever you need to use it for.Mel you did not mention if you have children and at both your ages this may be a item you need to discuss with each other if you do not have children –you both may need to discuss if this is a factor that may effect your income ability in the future and effect your future investment plans .
Mel amongst other things I would be switching the current loan on your PPOR to Interest only and structuring it in a manner that 1 property does not support both loans.
Richard Taylor | Australia's leading private lender
Mel amongst other things I would be switching the current loan on your PPOR to Interest only and structuring it in a manner that 1 property does not support both loans.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
