I want to start a property portfolio but I am currently buying and renovating my principal residence to build equity. It is my first property purchase. The house is fibro construction and 34 years old. Is this strategy sound or should I perhaps consider selling this house, invest the proceeds in investment property and rent a principal residence while I continue to build a property portfolio? (I think Steve M calls this delaying gratification). Should the location, age and type of house I live in be given serious consideration in weighing up the pro and cons?
If moving to a new location should I consider holding on to the house I am living in at the moment or should I convert it to an investment property and rent in the new location and continue building a property portfolio? Are older properties worth holding on to or should one dispose of these and look for new or near new to take advantage of the depreciation that can be claimed through the taxation system?
I’d appreciate anyones opinion on this.
Cheers
Gerry Skinner
Gerry, welcome to the forum.
I guess it depends on what you are comfortable with, your future plans, and how much equity you have in your PPOR.
If there is equity, you could redraw it to buy some IPs, CF+ or CF- depending again on what you want to achieve.
If you are planning on moving locations in the near future, you need to weigh up if your PPOR would make a good IP, or if you would be better off selling it and buying other IPs that will provide a better return.
I think you need to map out what you would like to do, and where you plan to live in the next couple of years, and go from there.
Cheers
MelI agree with Mel.
I also think it may be wise to make up your mind about whether to sell your PPOR or to rent it out, or to keep living in it and have it revalued to be able to use the equity you’ve built by adding value/renovating before you finish decorating/renovating.
You see, I think if you decide to keep living in it, then you would probably want to redecorate according to your taste, add nice little extra things and fittings, perhaps expensive bathroom fittings etc.
If you decide to rent it out, you may want to use just cheaper fittings etc since expensive taps, doorknobs etc won’t give you any more rental return then basic ones in an average house.
To rent it out you could keep it simpler to reduce costs, and also use neutral colours that won’t clash with anyone’s furniture so the place would be easier to rent out.
A lot of tenants are put off by pink or blue walls and curtains, from what I have found out.
E.g. pink walls and curtains in bedrooms won’t attract families with boys.
Just some food for thought, hope it will help in some little way.
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