Hi, hope someone can give me advice on what to do!
Current situation:
-one IP in Orange, slightly positive cash flow after deductions, 80K equity.
-Have bought acreage out of town and planning to start building this year – all up cost house and land around $650K.-Bank has given us loan approval to keep our current PPOR as an investment property (so would be 2 x IP) after moving to our new house when built.
So all up we would have mortgages totaling nearly 1.3 million. LVR would be around 90%, we have incomes that can service the mortgages ok and also the shortfall on what would be the 2nd IP – $600 – 700 a month (currently PPOR).
Having such large debt concerns me, and also the fact that our PPOR hasn't shown much capital growth in the last 3 years.
Questions: should we cut our losses, sell our PPOR (after fees come out only slightly ahead) or hold it and cop the negative gear waiting for future growth? House is worth 440K to sell and would rent at around $480-500, so not the greatest investment property potential!
Orange is booming rental wise but house prices are yet to increase much – any advise on what to do? I'd hate to look back in ten years and see PPOR doubled or trebled in value, but is it worth the risk to be so highly geared even though on paper we can afford it?
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