Hi! We're looking for some suggestions!
Two years ago we bought an investment unit in Thornbury. Our aim was to build up a property portfolio while we lived in a rented apartment so we could eventually afford a home in an area close to the city.
We are currently renting and have been advised by an investment property specialist that we should secure our primary place of residence before buying any more investment properties.
Is this correct, or should we continue renting and buying investment properties in order to enable us to eventually afford a home in an area we want to live??
Any advice would be most welcome, as we're reading so many property magazines and books and are now totally confused about all of our options!
Thanks!
WWFor me personally we have rented in between 3 properties. The first home we renovated ourselves and made a great profit when we sold it after 5 yrs, enough to build our 2nd home on a huge block of land which we lived in for 2 yrs before selling and making another nice profit. We have almost completed building our 3rd home which we will be renting out
We have rented in between each of these homes, a lot of people say its dead money, but for us it was always a cheaper alternative We rent now in the city (the house we are building and renting out is in regional Vic) , so we still have an asset. In 2 years or so we will build again. I would go with whatever suits you guys best Either way you can still grow your property portfolio Woodie,
My view from a finance perspective, I would generally not recommend that strategy to anyone unless they had significant funds of their own so they would not need to borrow much to purchase a PPOR. Interest cost on non-deductible debt is to be minimised as quick as possible. From an emotional view, there are good reasons for some folk to live in their own home but it is a different decision and reasoning.If you had significant funds, you could purchase your PPOR with minimal debt, then refinance to extract equity to be used to purchase an IP. If you do not have these funds, it is a better cash after tax decision to buy an IP and continue to rent, presuming you are not renting at $800 a week or so. If your goal is to eventually buy your own PPOR, build a property portfolio over the next 5 years or so, then look at selling one of these, obviously incur CGT, but the free equity then funds your PPOR with minimal debt. Buying your own home with borrowed funds, you are paying for everything.
A $450k property with 80% loan, presuming the rent you pay is what you receive, at a 38% MTR, you are about $5k + better off pa purchasing an IP and continuing to rent yourself than buying an PPOR instead. Do the numbers and decide which works for you.
An alternative is to go down the renovation and sell path but most folk after the first renovation never want to do another.
You need to work out your long term goals then put a plan in place to achieve these
Good luck
Greg.
We have rented in between each of these homes, a lot of people say its dead money, but for us it was always a cheaper alternative 
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