Hi guys,
This is my first post as I'm new to the site, I have enjoyed looking at all the forum topics.
I'm new to the investing world and I was just after some words of advice.
We currently only have our PPOR which has just been valued by the bank at $300k. Our mortgage is $240k.
Just after some ideas to begin our journey. We have no real attachment to the house as it is not where we want to live in the future. So we are happy to rent it out ( it would be negatively geared, ideally we are looking for +ve cashflow) and move to somewhere else a bit bigger to rent ( have a family of 4). Open to all alternatives.
Thanks in advance,
Matts
Welcome Matts
Can you tell us a bit about this house of yours? ie How many bedrooms, which town & state it is in, and how big is the backyard.
JacM
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi jacm,
The house is in grovedale, it’s a suburb of geelong in victoria. It has 3 bedrooms and the backyard would be approximately 10x10mRight ok. Well there are a few options I suppose:
1. Sell your house to pull out your equity, and by a four bedder.
2. Rent your house out, and you live in a rental. You'd have six years to move back into your house after which you could still sell it capital gains tax free. If however you remain absent from your home for more than six years, or if you buy something else and live in it, then the exemption no longer applies.
3. Rent your house out with the intention of you living in rentals permanently.
I suspect option 2 might be your best bet. Interested to see what others say.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
ps if you do rent your house out, get a depreciation schedule done on it. Grovedale is a relatively new area so there'd be some good tax writeoffs. I used a company called BMT (quantity surveyors) for this and was very happy.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
How old are the kids?
Smaller kids can be moved around a bit but by about 10 or so they do need to start establishing friendship bases.
Hi and welcome aboard.
Another option to consider is extracting equity in your current property to kickstart your investing.
With those numbers, you potentially have $30k that you can extract – which could be enough to cover the deposit/costs for your first IP purchase.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:Another option to consider is extracting equity in your current property to kickstart your investing.With those numbers, you potentially have $30k that you can extract – which could be enough to cover the deposit/costs for your first IP purchase.
Hi Jamie, are you thinking to extract the equity by means of selling or refinancing?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Did the very same thing recently. Had a PPOR that was not really exactly where we wanted to live but hey, we got onto the ladder. We then moved into a newer home and started renting out the PPOR. I had completed heaps of renovations over the years we were there and didn't think anything of it until I had BMT Tax Depreciation come in and do a report. Surprised at the total deductions I was able to claim on my old PPOR even though I had owned it for a few years. Definetly was the icing on the cake to making it an investment property.
We are now onto the next stage again, the new PPOR now getting sold and moving into our newly built house (when it gets completed).
So best of luck, its good you have no emotional connection with the house so to speak.
Have you made any decisions? Are you looking to rent closer to work? Or looking to rent closer to where you want to live lifestyle wise?
Hi everyone,
Thanks for your input it has really got me thinking.
At this stage I like the idea of renting out our PPOR and moving into a rental property where we would like to live. Does this makes sense at all as we are paying off someone elses mortgage???
I have also thought that taking the equity out of our PPOR and putting it into a cheapish IP which would be +cashflow. I'm a bit raw with how this process works so if anyone could give any advice on this that would be great. We have a great mortgage broker but he suggested we pay down as much of our PPOR mortgage before we think of starting to invest in property. Good advice???
Cheers,
Matts
Hi Matts
Sorry have to say a Mortgage Broker who suggests you pay down your current PPOR before investing (especially if you potentially might rent out your PPOR) is not a great mortgage broker and clearly either does not have sufficient investment experience.
Buying IP's is a journey and like any journey you need to plan for it. This includes a balance between the financial structure and being comfortable with the loan commitment and the affects if any it has on your way of life and the family balance.
No point in owning a couple of properties but cannot take the kids out at weekends because they are costing you a packet.
There will always be opportunities in this world but how and when you take them is upto you.
To say to someone pay down your PPOR first before investing does not sound like the words of someone who has taken up many of those opportunities.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi richard,
Thanks for your post. I may have explained myself incorrectly. The mortgage broker didn’t suggest to pay down our loan he just suggested we pay as much as we can for a while and begin our investment journey when we have more equity in our PPOR.Hi Matts
I rest my case. Why would you ever pay down your PPOR where there is any possibility that the property could 1 day be an IP.
Interest only with 100% offset would have been the way to go.
Gives you both choice and flexibility as well as preserving the interest deductibility.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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