renters – what happens when u purchase ppor

spider,

As a renter, I wish I could tell you how I am buying my PPOR, but I am not doing it, and don’t even think about getting a PPOR. Fortunately,pretty much everyone I know and work with, is a renter- with or without IP’s. The old “great aussie dream” thing doesn’t really exist in my world, so I find it easier and easier to move away from the idea of PPOR to just invest in IP’s. I imagine if I was socialising with people who all owned PPOR’s, then i would feel that kind of social expectation to get one, but when your peers are renting, it feels kind of normative to rent.

One day, I will get my PPOR probably- maybe it will be one of my IP’s. But I reckon had I bought a PPOR instead of an IP when I did, I would have buggar all now- and would have had to rely on CG only.

If you rent cheaply enough, in a neighbourhood you like, then that non-deductible rent becomes a dip in the ocean compared to the non-deductible mortgage payments i would have to buy a place. Also, to get the kind of house I would want as a PPOR, I would have to pay probably 700k in sydney- and I just don’t have that kind of money.

If you have heaps of cash, then go for the PPOR, but if you buy well enough, you can just sell off an IP after a few cycles, and pretty much pay cash for a PPOR that suits you. If I had money from CF+ (eg $50 X 10 props), I would be spending that $500 a week on buying more properties. Either that, or i’d use that money to pay off some of the mortgages on those properties.

One strategy would be to use the profits (the cash flow) of your IP’s to invest in a PPOR, and then to use your wages to reinvest in IP’s (hence reducing your taxable income). If you don’t have a wage, but have retired and living on IP returns, then you have to live on your returns (wage replacement), and make do with that money.

kay henry