Hi everyone. Been reading a lot on this site but this is my first post. Thanks in advance.
I have a salary of about 80k & currently live with family and this is my situation:
– IP1 in Blacktown – valued at $440k with mortgage of $352k
– IP2 in Kings Park – valued at $550k with mortgage of $334k. This IP has an old pool and needs a considerable amount of work so is not an ideal property for ongoing investment (I don’t think).
I’m getting married next year and looking for a PPOR. We don’t wish to live in either IP. Our current options are:
1. Sell IP2 and purchase a new house in an area more west like Penrith or Glenmore Park – budget approx $600-650k. If I sell IP2 then my mortgage will be about $450k.
2. Sell IP2 and then knock down and rebuild IP1 and live in that property – that way I will have no IP. If I sell IP2 then I can use the money gained to fund rebuild + borrow some from back so mortgage will also be about $450k
3. I guess another option would be to sell both IP and use funds to buy a better PPOR but once again, I would have no IP.
As you can see, all options achieve a similar mortgage for my PPOR but I don’t know what to do, what would others do in my financial situation?-
This topic was modified 10 years, 1 month ago by
propertymark.
Hi Mark,
Welcome aboard !! You have started well with IP’s to have two already. I find it a bit hard to say whether one way is better than another as I don’t know the areas, the rent returns, whether one or both are negative geared, etc.I’m getting married next year and looking for a PPOR. We don’t wish to live in either IP.
Based on that, I guess you should look at which of the IP’s is returning the best Income, or could be upgraded (cosmetic reno) to provide a better rent. Then run the numbers based on having reno’ed the better one, and having sold the other. What do the numbers tell you? Can you keep it and buy a PPOR, or must you sell it too? Do keep in mind that you will likely be up for CGT on any sale, so do check with an accountant re the effects of that on your expected $$ outcomes.
Do update us and keep on asking – we will help if we are able to,
Benny
Be careful with the knockdown and rebuild strategy. Be sure you’ve got a broker that knows his onions on such deals. Some financiers won’t touch it because of the issue of getting caught in that middle phase where they’ve financed a property that had a house on it, then suddenly all it is after the knockdown is a block of land that is worth less than the original mortgage if they had to send in the receivers to sell it.
Also keep in mind that you want to have as little debt as possible on your PPOR (the one you’ll live in) and instead have the debt on the IPs. (Better if there is no debt at all, but there will be debt for some time, so the mortgage interest might as well be a deductible expense on your tax return. It can be deducted for IPs but not for a PPOR).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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This topic was modified 10 years, 1 month ago by
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