What first: PPOR or investment?

Hi Jekjoy

Why not do both?

I've helped plenty of first home buyers purchase their first home – and then tap into its equity to fund the deposit/costs on an investment property.

It works really well when the home that's purchased can be renovated for a quick equity gain. We then get it revalued – access the equity and organise the IP loan . Some clients rinse and repeat this process with each property they purchase –  and build a decent sized portfolio.

I wrote an article for Australian Property Investor magazine on this exact topic – here's the link.

Cheers

Jamie

Yes consider CGT and tax implications. 

Jeykoy, as JacM above mentioned why not look at doing both or buying an IP without using any of your own money.

We have helped hundreds of forums members of the last 12 years buy both at the same time without crossing their loans or using any of their own savings.

It is all in the structure of the deal.

When i arrived in Australia i purchase an IP and a PPOR the same week albeit i was lucky enough not to need any finance but the concept is still the same.

Cheers

Yours in Finance

Renting where you want to live and investing where the market is moving can give you the best of both worlds. They call them professional renters for a reason. 

We have a client CJ (who won't mind saying this): 28yo, self employed, single female, earning less than $90,000p.a. living in a rented apartment (that would be worth $900k) and pays $350 per week for her share. Living the good life and while saving a bit too. CJ has just bought another 2 investment properties with us in the last 2 months. One is an 2 bedroom apartment and the other is a 4 bedroom house. That brings her number of properties to 4, 3 houses and 1 apartment. 

At this point CJ will be able to buy again 18 months. All her properties are positively geared and she plans to buy 2-3 more investment properties before she buys a PPoR. She made her first investment 5 years ago and will be able to retire on over $2000p.w. by the time she is 45. Of course I think CJ is smart but her friends think she is a millionairess (all by careful saving and smart investing).

If you delay buying your PPoR and invest first, your ability to continue buying (serviceability) is going to let you grow your wealth much, much faster. Once you take the luxury of moving into your own home, you holt your ability to save and it often takes 5-10 years before there is enough money spare to buy that next property. The outcomes are as different as black and white. 

Hi Matt

Access equity in your PPOR  – set it up as a second loan which is used to cover the deposit/costs on your IP. You then set up another loan against the IP to cover the remaining balance.

So you basically have three loans set up. Original PPOR loan, equity release and IP loan. The first two loans are against the PPOR and the third against the IP.

Jamie

You're welcome

Cheers

Jamie

Hi Guys,

I am currently in the same boat Jekjoy in that my fiancé and I are unsure whether to buy PPOR or IP first. We both live at home with our parents and I am fortunate to not pay board by helping out around the house. Hence I am able to save quite substantial amounts every month (I am payed monthly). My current financial situation is as follows:

Base Salary: $75000 p/a

Savings: $80000 approx. 

I am completely debt free as we speak. I live in Adelaide and hence have been looking to purchase there however from what I have read on these forums everyone seems to suggest otherwise. Basically i was hoping to find an undervalued property, renovate as smart as possible, have it revalued and then hopefully draw on the equity made to fund the next IP. My only problem is no matter how hard I study the market or read literature, I cant seem to find or act on any property. Therefore are they any suggestions people can give me or even assist me in finding my first property?

In contrast do you guys recommend buying a PPOR before purchasing an IP? Also I have read numerous literature suggesting to finance the IP as interest only, but wouldnt it be better if you were going to hold for a long time to reduce the debt? For example say I buy an IP and keep it till I retire (this is purely a scenario) wouldn't it be better to have it payed off rather than only have access to its appreciation over time? 

Any advice is greatly appreciated and sorry if these questions seem amateur. 

Cheers,

Scott