Let’s say you are a male in your mid 20’s, married with a child on the way. You live and work in the centre of Sydney and own a house in New Zealand, which although not being cashflow positive (bought before reading Steve McKnights book) looks like being a great investment with great property managers and excellent tenants.
Let’s say you are renting in Sydney, but would rather be paying $330 a week into a mortgage instead of flushing down the toilet into someone elses retirement fund.
Let’s say… hypothetically of course… you maybe would like to jump out of rentsville and take up residence in owners lane.
Would you:
1. Buy low and do a renovation rescue in a cheaper suburb.
2. Continue renting and go and find CashFlow + houses.
3. Forget about houses – go for the stock market.
4. Get a massive loan and buy an inner city apartment off the plan (joke)
5. Rent a really cheap house and then buy some investment properties until you can afford to move into one.
6. OtherNow of course in this ‘hypothetical’ situation which may or may not represent actual people living or dead… I am looking for what YOU would actually do considering the situation of this person who most certainly isn’t me — of course I can neither deny or confirm that allegation.
P.S. The person or people in this imaginary story really like their jobs… (unusual I know), but keep in mind that this decision will be made with fairly large work commitments (not to mention a baby — i’m sorry, hypothetical baby).
Outbursts, Thoughts, Comments, Answers, Ideas, Solutions (Would love to hear solutions)…
Bless Your cotton Socks wonderful people.
You’ve got a bog standard situation there, where, without you knowing it, are probably not the one who shall make the final choice.
On a scale from 0 to 100% economically speaking, you’ve got an array of choices.
At the 100% economically good level you’ve got the tiniest run down dump in Drossville that you could purchase and somehow exist, with all of the associated pleasantries that accompany it.
At the 0% economically good level you’ve got the flashiest property you could possibly extend yourself to in Flashville that will almost crush you, and make you spin your wheels for the next 30 years but send the lifestyle and pose factor to the neighbours through the roof, with all of the associated pleasantries that accompany it.
Of course in the middle are a myriad of less extreme choices.
I’d sit down with the wife and honestly ask her what her tolerance level is on the scale from 0-100. With a new bub on the way it’ll be high with the nesting factor coming on strong. Don’t be surprised if she picks a 70-80% level choice, in which case you can forget investing for the next decade or so getting rid of your large NTDD.
Or keep going and be happy with your current ‘toilet’ option.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
this is the exact situation faced by a family member now. A real dilemma apparently coz their right into city life but are reluctant to hock themselves to the eyeballs in debt. he would rather die than live in twoheadsville apparently! So i then told him to rent (he’s now living rent free with the future outlaws….). Rent is dead money i’m told. So like youre story hoick, i told him to have the discussion with his fiancee rather than with me. My wife and I decided a few years ago to live a minimalist life which meant buying in a twoheadsville type of area, ensuring that we weren’t in over our heads. The equity we had built up in the property allowed us to start investing this year with another on the way soon. Your option 1 sounds feasible to me. Does your partner think so?
Eric
A renovation and a new baby happening simultaneously could end in tears.
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http://www.depreciator.com.auOriginally posted by depreciator:A renovation and a new baby happening simultaneously could end in tears.
Scottmake that WILL end in tears
(from a new mum)
lelseykI’m also struggling with the same dielemma. From where I’m looking to buy and live, even the cheapest 1 bedder will cost me in excess of $325K. And unfortunately I cannot find a strategy in converting the equity in all my IPs to equity in PPOR so I don’t need such a huge mortgage to get in to the market. Only way to increase deposit is to sell IPs and trigger CGTs, incur selling costs….etc.. and I’ll be selling better growth prospects IPs to buy in Syd where predicted growth is squat didley over the next couple of years. Then again, no one has a crystal ball…
I think I might have to stick to rentville as its <$250/wk and I don’t have to worry about NTDD interest costs, strata fees and maintenance..etc.. My break even is something like $15K pa. Simply, I don’t think I will get that kind of returns in that unit over the next 2 years – lower Nth Shore. Any thoughts guys?
Should your decision to buy PPOR the same as IP? I just look at the numbers, holding costs and projected returns..etc… and it doesn’t make sense to me. Maybe I should be placing more emotions into the decision making seeing your home should be your castle…?But I suppose will need to bite the bullet when this market picks up and buy that PPOR or when I get married, whichever comes first.
Confused.
Thanks for some great thoughts everyone.
Lots to consider… it does sound like that a renovation situation would NOT be a good idea [wink]
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