G’day All
My wife and I are moving from the country to Perth for 2010 and are in a quandary about what to do property wise. Here’s the deal:
Our house in the country here is worth about $350k, have a $60k mortgage on it and $175k line of credit secured against it. Also have shares worth $217k with a $112k margin loan secured against them (will are getting about $8k a year in dividends). We are both teachers bringing in about $2200 each clear a fortnight and we may be going down to 1 income sometime in 2010.
Here are the options I’m thinking about:
1. Sell country house, sell shares and buy a house to live in Perth (~650k) – expensive
2. Sell country house, keep shares and buy a house to live in Perth (~650k) – expensive
3. Sell country house, keep shares, buy a house in perth (~650k) and rent it out, rent in Perth.To me, 2 and 3 are better options, only I would have to buy in Perth before selling the country house so that I can swing the line of credit around to be secured against the perth house. Number 3 is the cheapest option as I can gear the Perth house and the line of credit but would have to rent for about 2 years before moving in.
What do you guys the about this logic ? Do I have any other options ?
Cheers in advance
Troy
Are you planning on relocating to Perth permanently? If not, perhaps you could rent in Perth as well as renting out your country house. What would be ther ental return on your existing home? Would it cover your mortgage and/or line of credit commitments? If you are not intending to stay in Perth this may be your best option, especially once you factor in all the extra costs associated with buying and selling homes such as legal and agents fees, searches etc.
cheers
Sonya
Thanks Sonya
Planning to move to Perth permanently. May rent out our country house for a while…
Hi Troy
Country House
If you only have $60k mortgage left on the country house, I would definitely not sell it. The objective is always to hold on to your properties. Furthermore, if you rent out the country house, I’m sure it’s going to be cashflow positive as well.
Perth
I would suggest finding a good investment unit in Perth which is also suitable for owner-occupying. If it’s just you and your wife, I see the opportunity in buying a small house in a growing suburb (no strata levies and potential capital growth) and Perth has many of these due to the battering it has received recently. Alternatively, buy a new or near new apartment so that you are creating another option for yourselves in the future of being able to rent it out as an investment unit. Don’t forget, you dont pay CGTif you sell it within 6 years after you vacant the apartment. Depending on what you need the line of credit for, I would try to reduce or get rid of it altogether if you can live on your fortnightly income. Try and get rid of “bad” debt and take on “good” debt such as a new mortgage on a new investment property that will see growth into the future.
Hope this helps!
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