Renovate or Another Property ?

Hi Muzza,
Welcome aboard. That’s an interesting suite of questions, but in thinking around them, they lead me to question you even more – take a look at my thoughts:-

1. You don’t mention current value or rent of a 2bdr in Wooloowin. But you said $250-300k to lift/expand it to a 4bdr. I took a quick look at re.com.au and it tells me a few things:-
a. That this is a high-value market, thus (depending on current value) it “might” be beneficial to do the reno/expansion – but that would depend on its value now. e.g. If it is valued at $300k now, then by spending $300k it seems you would increase the value by around $500k (good value!). But if it is valued at $600k now, spending another $300k might be over-capitalising. Hey, that is a rough guess, but it is something to think on.

b. The stats on re.com.au show me that the Wooloowin market appears to be growing in value – the Median showing for a 3bdr in that area is $807k, but recent sales show $870k. It also says this is a “high demand area” with many wanting to buy there. A quick call to an agent should confirm much of this.

c. There was no median data for a 2bdr – is this a low demand size there? Are the likely tenants all families in that area? Who is renting it currently? And what is the current rent? Data says median is $420/week for a 2bdr, $470 for a 3bdr, but $700 for a 4bdr ????? So, are 4bdr’s in high demand and low supply? That could be a “tick” when considering whether to reno/expand this place. At $700 a week, this could be nearing 5% return instead of the 3% of a 3bdr……

Muzza, a question or two re this quote of yours:-

I moved to the outskirts Redland Bay after buying a business because of not wanting to commute and rent there.

What if it were to prove more financially beneficial to you to buy an investment AND rent yourself? Many do this (search for “rentvesting” to get an idea of how it works). There are several benefits to doing it – but, of course, there are also benefits in owning a PPOR too. The decision must be yours, but seek out all the facts of both ways first. As one example, IF the Wooloowin property is your current PPOR (i.e. you lived there) then talk with your adviser about Tax Exemption for 6 years after moving out of a PPOR. And also ask all around you renting while still owning IP’s – and how that can assist you (and work against you too). The answers could surprise you.

Have a good read of that PM I sent, and the link to the “big picture” topic. There are lots of good posts around PPOR and benefits for and against. Check the Index on the first page of that link.

Feel free to pop back to either add more info, or to ask more questions (we don’t bite unless you ask us nicely…. :p )

Benny

Muzzo Benny is the man! knows his stuff so I would read and Reread anything he sends you.

I think the answer will be self evident once you understand your long term goals and workout the pros and con of both options and even some other ones, I would get quotes for both options, look at the growth potential, rental returns and other benefits and also cons.

one you clearly have a well established idea of both paths then you should see the benefit of each and know which fits you.

Happy to have a chat if you would like.

Kind regards

Jaxon Avery