All Topics / The Treasure Chest / Buy more investments or buy my own home??

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  • Profile photo of AllanFCAllanFC
    Participant
    @allanfc
    Join Date: 2003
    Post Count: 25
    April 23, 2003 - 8:18 am

    Hello,

    I have been investing in realestate for about 1 1/2 years now using buy and hold strategy with 3 properties in my portfolio. I have been using the growing equity of each of my investments to buy more properties. My situation is that I still do not have my own home, that is I am still renting out.

    Would it be wise to just keep buying investment properties which means holding off buying my own home for later or should I work towards acquiring my own home now?

    Any advice on what options are available to me?

    Kindest regards,
    Allan

    Profile photo of PeterParkerPeterParker
    Member
    @peterparker
    Join Date: 2003
    Post Count: 20
    April 23, 2003 - 9:02 am

    Allan, it depends on what you want and where you live. Four questions:

    How important is having your own home that you can do as you like and no inspections?

    How focussed are you on your financial goals, or do you have lifestyle goals as well?

    How long do you intend to live in the one place?

    Are you in an area where prices are high and yields are low? If so, stay renting. If not, the opportunity costs of buying (particularly at this time) could be high.

    I personally went for renting + buying an IP rather than buying my own PPOR. Even the govt’s $7000 didn’t sway me. but your needs might be different.

    Peter

    Profile photo of AllanFCAllanFC
    Participant
    @allanfc
    Join Date: 2003
    Post Count: 25
    April 23, 2003 - 1:15 pm

    Hi Peter,

    Thanks for the quick reply.

    Well, having my own home is probably the second most important thing to me at this present time as my first priority is to acquire more investment properties to build my portfolio. however I would like to own a house to live in the very near future, let’s say 3 – 5 years time.

    In regards to how long I intend to live in one place, well personally I dont mind moving from place to place, if I feel that there is an opportunity in another place, then I would go there in a heart beat.

    I currently live in Sydney but as I said, I’m willing to move locations if I have to inorder to reach my financial goals.

    I do have some idea about how to solve my problem but not sure if they are viable or not. Maybe you could give me some feedback on the solutions that I came up with? I was thinking of maybe investing and getting a home at the same time either by buying a multi family home, and either move into one of those units or I could get rid of one of my tenants in one of my properties, and move in there, and rent out the multi family units, and still have the same income.

    Any feedback would be of great help.

    Thanks again.

    Kind regards,
    Allan

    Profile photo of B.DerosB.Deros
    Participant
    @b.deros
    Join Date: 2003
    Post Count: 34
    April 24, 2003 - 7:06 am

    My take on this is based on the fact I am young, have no dependants and live in the currently maxed out market of Sydney. There is no way I can get the same returns on a home here than I can on an investment in say Brisbane.

    e.g. rent income pm in Brissie = $950
    – rent paid in sydney = $150
    – mortgage payments = $800

    $0

    e.g. rent income pm in Sydney = $1400
    – rent paid in sydney = $0
    – mortgage payments = $2400

    -$1000

    My estimates are based on buying a similar home in a similar suburb in each city (and renting out the excess rooms)

    It’s a no brainer. Buying a home in Sydney is actually destroying my cash flow, and for basically no benefit. I might be losing $1000 a month or more in mortgage payments.
    Now, I also get a lifestyle and loan servicibility benefit by being in Sydney, e.g. I can earn a higher income, support more properties and live in the suburb of my choice and still be ahead. That extra $1000 can be used to service several more properties.

    From my POV (and for my circumstances) rent is not dead money at all! It’s part of the investment!

    Profile photo of SaskatoonSaskatoon
    Participant
    @saskatoon
    Join Date: 2002
    Post Count: 112
    April 24, 2003 - 1:00 pm

    Hi AllanFC.
    How about the following:
    Buy a property which you could regard as ‘home’.
    Move in and qualify for FHOG if you are eligible.
    After a period move out and rent somewhere, thus the ‘home’ – your PPOR – becomes an IP, but because you have lived in it you are entitled to claim it as your PPOR for up to 6 yrs. This means it will be exempt from CGT for that time. This does not preclude you from nominating any other property as your PPOR, but you, of course, can only have one PPOR at any time.

    Terry
    Finance

    Profile photo of BorisSBorisS
    Participant
    @boriss
    Join Date: 2003
    Post Count: 20
    April 27, 2003 - 10:24 pm

    Hi Terry,

    During this 6 year period when you can sell
    your previous home without attracting CGT
    can you claim house and fixtures depriciation ?

    Boris

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