Hi All,
Hope some forum members and professionals can give their advice.
So here’s the current situation.
***Investment Property 1***
Unit
2Bdr,2Bath,1Car
Valued $450K
Owe Bank$301K
Interest Only Loan
Curently rented out at $420/week.
Current Mortgage repayments: $1760/month
Strata/Year: $2800/annum
Council: $800/annum
Water:$580/annum***Current Income and Savings***
Savings: $30K
Salary 1: 90K
Salary 2: 55K(Currently on Maternity Leave, returning May 11)
Currently renting: 1694/monthQuestion:
I purchased the IP1 in 2003 prior to getting married for $360K, and in 7 years it’s value only increased to 450K. We are now in a situation where we are thinking about either purchasing another IP or buying our PPOR. The questions is it worth hanging onto IP1 in the process as I’m not sure how much more this property will increase over time. It had only raised capital value of 90K over 7 years, so is it better to sell now and use the money to invest in a house/land offering(rather than a unit) move in – > then move out after 6 months and rent out the house/land? Could anyone advise of any calculators that can give us an idea of how much we will pocket if we sell IP1?Or …
Shall we keep the IP1, use the equity from that loan and purchase our next IP1 or PPOR?
All opinions and advice is much appreciated as we are newbies
Thanks
J&JIf you feel that the property is not performing and the money could be utilised better elsewhere (either a PPOR or an IP) then I'd be tempted to sell it. Where is the property located?
Could you possibly add value to the property? You might be suprised with what a few costmetic renos can acheive.
Because it's an IP, you'll be up for CGT when selling as well as the general costs associated with selling a property.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
What does your research tell you? Has it had steady growth? did it peak then flatline? What's happening in the area?
I know people who thought their properties were not performing over 5-7 years and sold them in 2000 only to miss out on 100% gain in the next 3 years.
Remember sell and buy costs. Is the extra cost justifiable? I'm not one of the "never ever sell" brigade but if I was to sell it would have to be because I can do much better with my money elsewhere.
Catalyst wrote:I know people who thought their properties were not performing over 5-7 years and sold them in 2000 only to miss out on 100% gain in the next 3 years.That what be my major concern – you'd be kicking yourself if that happened.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
The property is in Homebush, 2140
Where can I find useful information to help me decide? Any tips?
Our gut tells us to keep it. I did the calculations and after the tax return it’s costing me a bit over 1500/year which isn’t much at all.
We still want to increase our property portfolio. So thinking about using the available equity in IP1, and along with our savings use it to purchase a PPOR in 2011. Live in it for 6-12 months, then rent it out as an IP2. Question with this method – When we move out IP2, what if we wanted to move back into IP2 and make it our PPOR.
I remember reading somewhere you may need to pay for CGT when moving into your IP, but then also heard that if you move in before a period of time, you don’t have to.
Can anyone confirm if that’s true and where that information is officially available?
Bump
Hi Jyon.
First I would not be selling if you are in Homebush. I'm buying in Sydney at the moment. I still see good growth there (just my opinion of course).
With the IP2. If you live in it first then move out you can rent it for 6 years and not be liable for CGT. You can then move back in and if you want can then move out again for another 6 years with no CGT. This is on the proviso that you do not have anorther PPOR in that time as you can only clim one PPOR at a time (except for the 6 month change over rule).Keep reading and asking questions. There's lots to learn.
Good luck. Sounds like your on your way.
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