We have an opportunity to roll our PPOR into an IP, or sell it.
Valuations have come in between a low of $360,000 to a high of $500,000 depending on the agent and their sales pitch (we have residential zoning that allows development of units) however there is a feeling that around the low 400k mark should be achievable.
Initial rental figures coming in are around the $380p/w mark (conservative).
The property is a 2 bedroom house (small) on a 1000m2 block of land around 15 minutes from Canberra CBD.
We are moving the offset funds out of this property into a new PPOR which was purchased for $740,000 (20% of the value of the new property)
My income is in excess of $150k with no other deductible assets at the moment.
Given the net cost involved in the newer mortgage being quite high we are considering selling our current property to reduce the initial net outgoings however are also looking to the costs involved in maintaining our existing PPOR as an IP.
Our main concerns are the potential gains of maintaining this property (i.e. Capital Gains) vs. the known difference in additional interest we will have to pay on the new property given the mortgage will be higher as we will have potentially around 100k or more tied up in our existing PPOR.
My investment hat says that given the land parcel size and zoning is fairly rare in this neck of the woods (Canberra region) that we try and hold the land however my 'reduce your net debt' hat says sell the existing PPOR, reduce the new PPOR net debt base and then look for an IP specifically purchased for that purchase.
Thoughts ?
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