Hi,
I have just moved to Sydney after being away from Australia for two years. I am just surprised how much rent has went up in Sydney in this two years. I currently have around Aud $400 000 to invest. I was thinking whether i should use the cash to buy a two unit for cash or whether i should rent a place and invest the cash elsewhere. I will not be able to get a bank loan from the banks here cause i am not working here yet as i just relocated and hence will not be able to buy a property under loan.Thanks
HK
Welcome home, Hasina!
Firstly, talk to a mortgage broker re loans. With so much equity, if you have an in-demand well-paying profession (eg engineer, doctor, etc), I'm confident that you could find some lender willing to take you on.
You can have a PPR and the benefits of negative gearing by buying a PPR in the name of a Trust and renting from the Trust. You do lose the PPR CGT exemption, but if the Trust never sells, no CGT event ever happens anyway… Note, though, that the Trust would have to have other profits against which the negative gearing loss could be offset, OR the Trust has to be non-discretionary – seek professional advice if considering this strategy.
Apart from negative gearing, the other consideration is whether the property you're want to live in is a good investment. If you want to live in area X, but area Y is a much better investment, then unless you want the lifestyle benefits of living in your own home, you're obviously better off to rent in area X and invest in area Y. Or if you'd rather live in an apartment, for example, but houses are a better investment (in your assessment), then rent an apartment and invest in a house.
Best wishes,
Tracey
Hi HK
You should easily qualify for a loan here straight away.
Buying a unit for cash could be a good idea as you would have a PPOR which would be CGT free. Once you have this property, you could mortgage it and purchase more investment properties using the initial loan for deposits and costs and borrowing the rest.
Renting initially and investing can also work, but you would be paying off someone else's mortgage and you would not have a CGT free asset growing for you.
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
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