Hi guys I need some advice please. I am currently living in a company house paying little rent and have our house that we used to live in as our first investment propety. Now in the future I would be moving back to the city, I would like to move to The Vines in Perth, should I buy a million dollar propety now and rent it out or should I invest small in the suburbs and buy my dream house latter?
Thanks Andrew
Hi Andrew,
in the future I would be moving back to the city, I would like to move to The Vines in Perth, should I buy a million dollar propety now and rent it out or should I invest small in the suburbs and buy my dream house latter?
For CGT benefits alone, I would suggest holding off its purchase until you are ready to move straight into it. Meantime, another IP would probably be useful. The beauty about an IP is that it can be in an area that suits a rental role, where you may have a better return and a lower cost (you might even be able to afford two !!)
Of course, all of the above depend totally on your scenario – do you need Income, or Growth? What is your primary goal with IP’s? Is Perth a good option right now for rentals, or is it declining (I don’t know Perth)? Are you looking for buy and hold, buy/reno/hold, buy/subdivide/build/hold, etc.
With your cheap rent, it’s a great time for you to build your wealth – well done for joining us and inviting others’ thoughts,
Benny
Thanks Benny
Will be looking for growth in the long run, say 20+ years. I don’t want to buy ten houses just a couple. I like Perth because I’m comfortable with the area, instead of going big straight away and being negative geared I should buy small for now and think big in a few years time just before I head back home to Perth.
I think you’ll find most of metro Perth will be negatively geared, but obviously the higher the purchase price the larger the negative gearing generally! Clients have been finding mostly yields <5% across the metro areas, with some inner suburbs floating around the 2-3% mark.
In any case if you make a purchase be sure to have your loan setup correctly, otherwise you’ll have a costly mistake when it comes time to purchase your PPOR. Setup your loans as interest only with an offset account attached for any extra repayments, so when time comes to make your dream PPOR purchase, you can access all your offset funds for your deposit, minimising your non deductible PPOR loan, whilst maximising deductible debt.
Have a chat with a savvy finance broker specialising in investment properties if you haven’t already so they can make sure your finances assist with your future goals.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
If you were to buy your dream home at the vines (or elsewhere), you can rent it out for 6 years, and still legally claim it as your PPOR for tax purposes. Given you have a company house this would be very advantageous.
The answer to your question will be dependent on your belief/answers to the following:
What are going to be the drivers for the Vines to grow in value above the Perth Metro average?
What is going to give me more capital growth over the period from now until when you are going to want to move into your dream home. A property in the Vines, or a well selected investment property, located in an in demand area, that you can apply some strategies to, to increase its value and or yield?
What holding cost and yield are you comfortable with, today and looking into the future when interest rates do finally rise. The Vines has a huge mixture of property types from new low end 3 x 2’s on 450m2 to fantastic mansions on 4000m2. I presume that you are more towards the mansion end, which typically has a lower yield, but a lesser vacancy rate.
What is the tenant demand for the type of property you want to buy in this area, verses other areas. Where are the nearby jobs that prospective tenants are going to want to live near by.
Once you answer these questions you will have your answer.
If you were to buy your dream home at the vines (or elsewhere), you can rent it out for 6 years, and still legally claim it as your PPOR for tax purposes. Given you have a company house this would be very advantageous.
Not sure this is correct. You need to live in the property first, then you can rent it out, as long as you don’t own another property as your PPOR at the same time. If you have a company house, then you wouldn’t buy more IPs and stay in the company house?
I agree with Benny’s comments/thoughts above.
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This reply was modified 10 years, 1 month ago by
ChrisA1.
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
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This reply was modified 10 years, 1 month ago by
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