hello i am very new to this. i have been following the forums for a couple of months now and thought i would ask for some advice…
We are currently selling our home to free up cashflow to start property investing but we are not sure if we should rent or buy a cheaper house just to live in and renovate instead of paying rent.Would love to hear any ideas or suggestions thank you..[suave2]missytor
Hi Insert,
Your willingness to suffer a little sacrifice in order to invest is a good first step I think.
Another way to free up money may be to borrow against the equity and stay where you are.
You would have thought of this though, and it seems you are keen to start anew and go hard.
I would take care, depending on where you intend to invest.
Many parts of Oz have only declined a little from their heady peaks.It may be better to wait a little while till prices prove stable or plateaued. Unless you can pickup a bargain of course.
It would only be a bargain of course if it offers a good return, or has good cap gains potential or both.Places with good cap gains potential are not thick on the ground right now.Many props will likely decline in value in the short term IMHO.
However you would have a much better knowledge of your area than I do.
Research, learn and persevere and you will succeed.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Do you really need to sell to free up cash?
If you sell then you either need to buy or rent. It costs to sell. And you lose the CG exemption. Plus you have one less property working for you.
Can you borrow against the home to buy IP’s?
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 75% LVR***
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
thank you for the reply but dont have lots of equity maybe fees would take a chunk out and morgage repayments would be higher am i right..
i am not sure….missytor
If you do not have lots of equity then selling will release not very much money as you will have to pay the bank back what you owe on the house and pay commission,title discharge,solicitor fees . If you rent you are missing the opportunity for capital appreciation of the home you live in which would be cgt exempt. Mortgage repayments would be on a seperate loan which is cross colateralised from the home you owe. You would pay repayments on the new loan as well as on the loan for the house you live in.
Renting has the advantage of not having to pay out for repairs and pay a mortgage but has the disadvantage of no capital appreciation.
Two mortgages increases your financial risk !!This is general advice you should consult a licenced financial advisor who will also consider your personal financial situation before giving you advice.
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