Hello Investor team, I would greatly appreciate some help here as I think Ive read too much and am over thinking things. I currently rent out my PPOR (2.5 yrs) which I built and lived in for 4 yrs. I rent in Bris, have $410K equity in my rental and $20K in the bank. I know I should be doing heaps with this but am a sook! I want to set myself up for retirement as super isnt going to cut it. I’m not sure who I should be talking to, accountant, mortgage broker, financial advisor, bank…all of the above and who do you believe? As I only owe $18k on my house (which i can pay off) do I have to sell this? ( capital gains??) to buy IP’s because its a good renter in a top spot. Once its paid off there wont be a lot of tax benefits. Or can I re mortgage it to buy PPOR? Should I sell it and buy a PPOR then use equity to buy IP or sell it and buy IP and keep renting? Arghhhhh Help!!!!
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This topic was modified 10 years, 4 months ago by
missyminer.
Hi MissyMiner, first of all, breathe! You’re doing well to have essentially what is an unencumbered IP. Defined goals is a good thing and looks like that is a little muddy for you at the moment. Are you happy renting? Did you want a PPOR or buy IP’s or both? What sort of time frame are you wanting to work with – ie in how many years do you want to retire? What are your priorities?
I won’t comment too much on the tax side of things but if you were to draw on the equity of your IP and wanted maximise the tax effectiveness then those funds would be best served purchasing IP’s. Is your existing IP a good investment? You say it’s a good renter which is great, but what is the return like based on it’s value?
I think you should talk to most of the above :) Get a good team on your side – accountant, solicitor/conveyancer, broker for sure and a financial advisor for insurance would be help too to make sure you have all areas covered.
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
Hi missyminer
Welcome aboard :-)
Agree with above – take a deep breath! You don’t have to make a decision today :-)
Let’s take it back a step.
What are your goals with property? What are you aiming to achieve?
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]
Thanks Kinetic phew… breathing…. thanks for your advice, much appreciated. My renter which was PPOR is valued at about $440k and I get $420 pw rent @ the moment, hopefully $10 more from Oct. I pay $410pw rent in Bris. Ive always believed rent money is dead money so have aimed to have a PPOR but the more I read maybe not?… Breathe lol….. I am wanting to retire in about 12- 15 years and would like to have IP’s providing me income. As my renter was a PPOR isnt there some capital gains penalty if I dont move back in within 6 yrs of renting it out? So many rules!
Thanks Jamie..re retirement see above reply. I’m looking to do something in about 6 months as I am about to start a new job and of course will have 3 months probation before I can go for any sort of loan. Just looking to set myself up so when the time comes I know (I hope) what I’m doing. With so many brokers and advisors out there is it just a gut instinct as to who to trust?
Breathing is good! I think even I held my breath while reading your post!
I’m assuming you’ve had some good CG while you’ve had your IP too? (As an aside, do you have a depreciation schedule for your IP? If not, worth getting one to help with tax).
There’s two schools of thought on rent vs buy. It can be seen as dead money, but it can also be seen as you living somewhere where you can necessarily afford or want to buy in. While you rent, you can also build your portfolio and maximise your deductions as opposed to having undeductible debt. But, you could buy in an area for a PPOR with good CG and have the PPOR exemption when you sell. It’s what you’re most comfortable with and suits your strategy.
One of the accountants on the forum would be able to comment on the CGT exemption status on your IP.
Regarding probation – you’ll be surprised what some lenders will allow, is the new job in the same industry or are you performing a similar role? You would have more lender options available to you if you wanted until your probation finished, but you’re not excluded from lending by being on probation.
If there’s one thing I’ve learnt, it’s to trust your gut. I made a post about this in another thread. Essentially, if you’re looking at engaging the services of someone via a forum have a read through their threads and posts to get a feel for them and if you like what they say or how they interact. Also, search their name to see what others may have said.
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
Breathing a little easier now.. Yep have depreciation report for IP. As to CG….hmmm after I built it probably lost about 30k over 3 years but is on the up slowly, been reading its going to go up again very soon (Sunshine Coast). As to buy or rent Im still in 2 minds (this is where I have to make a decision) guess Im used to having my own place and can do with it want I want. Hopefully this new job will make me see where and how I want to live. Not worried about the job probation, will give me time to get everything sorted. Thanks so much for your advice I might even sleep tonight! If you can think of anything else it would be appreciated, Thanks Kinetic
Ahhh, Sunshine Coast…. For some reason I was thinking inner-ish Brisbane. Sunny coast, or parts of, is starting to get a bit of attention which is good – seems to be entering the recovery period now.
Good that you have a bit of time to play with and firm up a bit of a plan. I find that setting your end goal and working back from there works. So you say you want to retire in 12-15 years – how much income do you want to retire on? For arguments sake, say it’s $80k so what kind of, and how many, purchases do you need to make to achieve that? What CG and rental income/CF will you need to ensure you will be receiving an $80k equivalent in 15 years? Reverse engineering is good! Your team will be able to sit down with you and help nut it all out all the details too.
Enjoy your sleep.
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
Welcome Missy and nice to see a fellow Queenslander on the forum. I was getting a complex about being outnumbered from down South.
With the equity that you have don’t worry about the probation period as this is easily overcome in regards to the financing of your future purchases.
I often get asked by forum members how i managed to build up 40 properties over a 10 year period in Brisbane but the simple answer is you don’t have to do it all in 1 go. With the correct financing structures and discipline you will not have to change your lifestyle in any way in order to achieve your end goal and a healthy retirement income.
When i started buying in Brisbane in the mid to late 90’s prices where flat and going nowhere. I wanted to look at ways of paying down the investment loans to create a lifetime rental income and therefore looked at combining a buy and long term hold strategy with other positive cash flow generators.
You have to understand that capital growth is not a certainty go forward and therefore look how you can achieve your retirement income goal with a mix of rent and other income flows. Think to yourself what happens if prices stagnate, could I still afford the things I enjoy.
Both my business partner (Jacqui – JacM on PI.com) and myself have worked with hundred of forum members over the last 10 years to get them moving in the right direction. Half the battle is getting them in the right mindset to open up their eyes to alternatives.
With the available equity you have in your current property and obviously the right motivation there is no reason why you can’t get there.
There is nothing more rewarding in seeing a client make good strides in their wealth creation.
Cheers
Yours in Finance
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This reply was modified 10 years, 4 months ago by Richard Taylor.
Richard Taylor | Australia's leading private lender
Thanks Kinetic, reverse engineering is exactly what I need to do.
Thanks Richard for your input. So much valuable advice on this forum. Ive taken it all on board and am going to start talking to some people about getting started. Talk soon.
Hi MM,
Good to hear you are breathing once more…. :p You appear to be in really good shape – you will look back in 10 years and give yourself a huge pat on the back !! But wait – you could even do that NOW !! What you already have is a nice base to start from.Do catch up with this thread :-
https://www.propertyinvesting.com/forums/general-property/4349450As well as pointing to answers to common early questions, you will cheer to find one post links to a thread which discusses “To buy? Or to Rent” Which is better. Do note that it looks only at the FINANCIAL side of things. You have already mentioned other important considerations, and they might have you choose to go “the other way” – and that is OK too. So long as you have chosen after knowing all the facts, it is all good.
And welcome aboard – it seems you are already glad you joined up :)
Benny
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This reply was modified 10 years, 4 months ago by Benny.
Hi Benny
Thanks for the welcome and yes Im glad Ive joined this site. So much information and the response to my 1st thread has been awesome. Going to look at the “Rent or Buy” link now as this is still a major contention for me. All very exciting I think, looking forward to see how it all pans out.cheers MM
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This topic was modified 10 years, 4 months ago by
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