Hi all
I have been working towards buying my first PPOR and will be ready to buy in around 3 months. My intention is/was to pay off as much mortgage as I can ASAP and then start to use the equity to buy PCFs. I live in Sydney and will have around $500,000 to spend on a 100% mortgage. (with my costs saved excluding the FHOG and a reasonable buffer to make me feel safe as I'm self-employed). I have been approved, in theory, for a mortgage on this basis.
However, I am still wondering if this is really the best way to go, or if I should keep renting and jump straight into the PCF market??? Ideally, I would much prefer to own my own home and am confident I am astute enough to buy something where I can add reasonable value quite cheaply . However I would be prepared to forgoe the pleasure of owning my own home and continue renting in order to buy PCFs instead, if it were a major advantage to me financially.
I would be very grateful for opinions on this, especially taking into account where I live and the market currently. If you have a strong opinion – go for it, I'm all ears! I need to get clarity on this soon!
Thanks heaps!
Central queensland coast.. Yeppoon, Zilzie, etc is booming.
Whay would you invest in Sydney, where all the major analysts (BIS, KPMG, AMP) are all marking Sydney has having little to no growth in all 2007, and 2008. Interest rates are up again in May… more pressure on Sydney affordability.
For $149k, you can buy flat 780sq land blocks, 250 mtrs from beachfront, 500 mtrs to boat-ramp, within a golf resort, with recreational club, and fully approved masterplan, 35 mins to airport with direct flights to Sydney/Melb….
I've been investing in Qld for 6 years now, accrued over 10 props, with vals over $2M. Also buying in Sydney, but in Oct/Nov 08', with 50% deposit – By selling a few props and keeping the golden-eggs.
Invest first. Syd Rents are still very cheap by comparison to Interest on a 100% mortgage.
Let me know if you'd like more info – I love investing in property .. so ask away
Cheers
Shane
The arguments for and against what you are asking are numerous.
A main reason for owning an I.P as your first property is the tax write-offs from the holding costs of that property, but you still have to pay rent where you live as well, so there is a bit of a trade-off. Because you are self employed and probably don't get tax refunds, then this may not be as good a strategy as it would be for a wage earner.
Unless you own your onw home outright, renting is usually cheaper, and you can usually rent a much nicer house for the same money as your mortgage would cost. But would you do that? It seems to me that you are the type of person who would rent somewhere less expensive and commit more dollars to the investing track?
You sound as though you have the right mindset for owning and investing; you can see the benefit of adding value, and working towards owning investment property. It may be better for you to get the PPoR, and follow the plan of reducing the loan as fast as possible (as everyone should do I.M.H.O), then you can get into investing sooner.
You should talk to an accountant about the benefits/liabilities of owning an I.P while you are paying rent elsewhere, given that you are self employed.
What are PPOR's? and PCF's?
Also, could someone please explain what PPoR's are and also what I.M.H.O means
thankyou
PCFs – positive cash flow investment properties.
PPOR – principle place of residence
IMHO – I have no idea and I too would love to be enlightened.Thanks for your feedback everyone! It seems I need to talk to an accountant to crunch the numbers. My own accoutant is great for general tax/business stuff but I don't think property would be his forte!
Can anyone recommend a reasonably priced Sydney accountant /property specialist in this field? Thanks again.
Tax is important, but should not drive ur decision to invest.. it's purely an added bonus, as long as your earning over 95k, as that means you can deduct 40% of your costs.. (shortfall between the rent, and Interest/Agent/Rates/Maintenance…). Also depreciation is a nice bonus.
You may come out even… but unless ur buying in some regional areas, and some interstate locations, it's very tough to actually make 'income' from a house & land, within the 1st few years of ownership. There are towns, but you might think they're too far away
S
…that shoudl read .. " over 75k " … to get a deducation credit of 40% on any running costs.
Cheers
S
Totally agree S that tax is not the sole reason to invest – to me it is the icing on the cake.
The tax deductions for I.P's are a bonus at any marginal tax rate. Of course; the higher your tax rate the better it is.
Sanctuary wrote:IMHO – I have no idea and I too would love to be enlightened.Commonly, that stands for "In My Honest Opinion", imho.
MT
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