All Topics / Help Needed! / Fresh Start: Buy PPOR vs. Rent & Invest?

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of PaltsiPaltsi
    Join Date: 2006
    Post Count: 1

    Hello Girls and Boys

    I've been a silent reader of this forum for quite some time. Now, as things have settled down at my end, I decided it's time to get active. BTW, excellent forum with excellent members!

    We are in a position that we can start fresh, so to speak.

    Some info that might be relevant:
    -We have >$40K cash available, no other assets or liabilities worth listing here.
    -I have rather good work with nice steady income (+$70K), same with my wife (+$50K).
    -ATM, we are renting 4BR house, paying ~375pw. (There is 4 of us)
    -Living in Hobart, Tas.

    Now, we've been wondering and pondering how to proceed from here. Buy PPOR or keep renting and invest to IP?

    Considering buying a suitable size/location own home, that would absorb all the $40K cash plus we'd get into a nice mortgage as well. Plus other mandatory fees/expenses that come with the pleasure of owning your own home. And these all to be paid after-tax dollars of course. If we would keep renting and use the $$$ to buy IP(s), certain costs would be tax-deductible etc, but how wise is it to keep paying rent and support someone elses IP dreams?

    What would you do? (Yes I know, this is "How long is a piece of string?" questions, just asking your viewpoint…)


    Profile photo of VStarVStar
    Join Date: 2004
    Post Count: 48

    Hi Paltsi,
    Welcome welcome!

    Depends – what's your ultimate financial goals?

    People keep telling me- PPOR is a lifestyle choice and not the best investment choice – whereas IP brings the money in and renting at the same time allows you to live where you want to live!

    What do you think?

    Profile photo of blazeblaze
    Join Date: 2007
    Post Count: 60

    Hi Paltsi,

    Welcome! I'm new too :)

    If I were you I would stop renting and stop supporting someone elses IP dreams. I would buy PPOR and then buy some IPs and let others support my IP dreams :P

    What do you think?

    Profile photo of James007James007
    Join Date: 2007
    Post Count: 64

    DepeHey gus
    depends on the size of mortgage you will have for the ppor as to weather you are better off renting or buying. Paying $300 plus rent isnt stupid as it may cost you that or more in interest to have a PPOR then you have the principal which you feel you have to pay becuase you need to reduce the debt as its not tax deductible.
    Contiuning to rent may be the better option but it all depends on
    – How much you will get back in total from your rental including tax deductions, depreciation etc less mortgage expenses
    -Versus how much its going to cost you to pay off your own home principal interest
    Most of the time it works out better to rent and rent out your property, for me its a matter of how much better off will i be for say an extra $8000 to $10,000 i think its worth it but remember if you live in your PPOR you can do any work you want to it which also increases the value and there is no cap gains upon sale.

    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    have you considered getting both PPOR and rental?

    You could purchase a property, move into initially and then out again. Rent it for up to 6 years claim all deductions and still not have to pay CGT if you do it properly.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

    Profile photo of mrdenn1smrdenn1s
    Join Date: 2007
    Post Count: 18

    Go see a financial planner….in fact go see a few of them

    Get the info from experts and then decide.

    If it was me, I would Buy a place if you are not a good invester as this will force savings and earn you capital gains over time.

    If you are a good invester, keep renting and use your $40k to buy an investment property and rent it out. Top up the negatively geared difference and pay interest only. Then in 3 years, assuming there is a capital gain of 10% compounding, rip out the equity and go again.

Viewing 6 posts - 1 through 6 (of 6 total)

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