Hello everyone,
This topic has probably been posted previously but just wanted to get everyone's thoughts. My partner and I (both 23) currently live at home and are looking to move out in the next couple of months. We currently have 2 investment properties that are both going well (good tenants, strong growth.
I have spoken to my broker and I know the amount we are able to borrow and was just wonder if this money would be more effective if we purchased another one (possible two) investment properties and decided to rent ourselves.
I am aware of all the pros and cons of both scenarios (security vs more disposable income, interest on PPOR not deductible etc). Do you think it just comes down to individual circumstances/preference.
Would appreciate any comments.
ThanksHi there,
To me, the decision comes down to non-financial factors, because there are pro's and con's for each scenario. With another IP, your interest is deductible, but you also pay CGT when you sell. With a PPOR, no interest deduction, but no CGT either.
For me, I would choose the PPOR way, mainly because I am a home-body, and enjoy living in my own home, with no (ok, minor) hassles. I don't have to ring the agent every time I want to hang a picture on the wall.
Another option is to look at buying a PPOR where you can add some value through renovations. THis way y9ou get your own home, but a reasonable investment as well, which will be CGT free when you sell.
Dan42 wrote:Another option is to look at buying a PPOR where you can add some value through renovations. THis way y9ou get your own home, but a reasonable investment as well, which will be CGT free when you sell.Yep, good call Dan. Also, after you've added value to your PPOR you can borrow against it for another IP! Another benefit of having your own PPOR is the stability – you won't have to worry about the owner selling up and kicking you out.
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]
An interesting thing that I found out the other day.
Robert Kiyosaki (who Authored Rich Dad Poor Dad), who preaches positive cash flow property. Bought his home before he invested in any property.
Not saying that that is what you should do. But just interesting that the number one author on personal finance did just that.
I was always a fan of renting and then investing in property, but now I am swaying the other way.
Owning your own home has other benefits (even if not financal). It offers security for your family and over time mortgage repayments can be much less that rent. You can also tap into your equity to invest if your property goes up in value and your finances are solid.
Ryan McLean | On Property
http://onproperty.com.au
Email MeWhy not do both.
Buy a PPOR, live in it for a while, then rent it out. You can maintain it exempt from CGT and still be able to claim all the deductions.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Tonally agree with Dan – if you have no emotional needs at all, or you don't believe owning your own home would make you feel more secure or fulfilled (I notice you have not mentione dhtis aspect) then maybe keep renting. But the opportunity to sell and make some CGT free money down the track, to value add and watch your home increase in value, and for the stability all are pretty powerful reasons to get yourself a 'pad' ….moreso if the loan reapyments are not much more than rent too!
All the best with what you decide.
ryan mclean wrote:An interesting thing that I found out the other day.Robert Kiyosaki (who Authored Rich Dad Poor Dad), who preaches positive cash flow property. Bought his home before he invested in any property.
Jan Somers also outlines buying your own home first and paying off the debt ASAP in her 'More wealth from residential property' book.
Interesting way of looking at. I think if you have the descipline to pay down your own home loan, then this could be the best way to go.I used my PPOR to leverage into property investing – in fact, I'll probably top up the old PPOR again in the very near future to purchase the next IP.
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]
I think the situation can change dramatically if you have kids. The reason is because quite often, the schools they are permitted to attend are related to the postcode catchment of where you live. So. If you are renting and get into a situation where landlords evict you every 6 months, you might also have to shift your kids to a new school, which is very disruptive.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I agree with JacM, it changes everything when you have kids. Before we had kids we moved a lot and we loved it. Now that I have kids I am less inclined to move.
What do you think you want to do? Do you want the security of your own home? Or do you want to go hard on the investing side of things?
Ryan McLean | On Property
http://onproperty.com.au
Email MeHi Ryan
I discussed this last night with my partner and i think we have decided that buying a PPOR is the best option for us.
She wants the security (as do i as well) so buying a PPOR will provide us this. Like some of the comments above has suggested, i think we are going to look at buying something that we can add some value to (which we have some experience in with our first two IP's).
thanks for all your commentsGood luck! I am glad you have come to a decision. I am sure you guys will be extremely happy.
Ryan McLean | On Property
http://onproperty.com.au
Email MeNice one Blair! Having an unmade decision hanging over your head is annoying. Decision made! Have fun with your purchase!!
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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