Hey gang
Last week I posted regarding what to do now we have sold PPOR and have no bedt. The consensus was to build, am just wondering what people think about holding off. With all the talk being about property prices taking a huge dive, wouldn't we be better to hold onto cash, rent and see what happens? Land prices can dive but building prices can only go so low one would think or is this being naive?
Love to hear what you would do,
mrs pMrs P
Its great to have cash and no debt. However, with today's interest rate cut the banks will drop their term deposit rates with in hours of the reserve cutting the cash rate. My point is Ive had most of my assets in cash, its safe, but after tax and then inflation + paying rent you will be loosing money. As you said building prices can only go so low. In fact the price of building materials will not go down. Try buying a kitchen sink at the hardware store for less than it was last year.
"Cash is King " or was King, 3 months ago I go 7% today I might get 4.5% If Im lucky. As to the talk of house prices falling 10 -20% I think you will be renting for a while till you find a place, there are some Im sure, but they where over prices to start with.
All the best with it.
Kind regardsT………………….
I heard Tents are going very cheap and fishing rods.
I really don't think anyone knows what will happen with share prices or property prices. Every expert has a different opinion. Really if you want a new PPOR then go ahead and get one. Your buying for the long term anyway. Sitting on the fence with your money in cash is loosing you money anyway.
mrs p, you might be interested in this. This afternoon I walked my niece through her options. Sell as is – make $200000; subdivide & sell after building; subdivide, build & live in one as PPOR; keep for rental.
Even I was surprised that she'd come through with -ve gearing [around $2to 4 thousand a year] but with depreciation & -ve gearing, she is in that corridor of -ve gearing but +ve cashflow.
We didn't use hopeful numbers. I insisted she put in the correct land value price. What I think is that her construction cost might be too hopeful. I also insisted on a very conservative number for expected rent.
So buying a block of land to build either PPOR or rental property is the 'simplest' way to get some advantage even in a place that has seen a lot of growth & may be flat in the next few years.
Run the numbers yourself. You might be pleasantly surprised.
KYYeah I agree with going for it if your cashed up.
Near term prices aren't really a worry if it's going to be your home in my book and being cashed up , more a worry for people with little or none of their own money down on the place and that pay too much , just try to buy well .
I know a lot will disagree with me to but I've always felt you can really make up some equity in building as well, as apposed to in a lot of cases buying built . Again by buying well and there's so much you can do yourself if into that stuff .Renting for who knows how long , if your cashed up why bother ? Get life started and off and running again . JMO.
Cheers
MrsP
I understand your question to be" should we put the money from the sale of our house in "cash" investments, go out and rent a place and wait for the prices of houses to drop".I don't know what sort of "cash" you are talking but hey lets say 350,000.
Your rent will be say $340 pw. No lets make it $300.
350,000 @ 4.5% if you can get it. for 1 year.
ROI: Before Tax & Inflation. $15,750 pa Taxed at say 30% Net $11,025
52 x Rent per week @ $300 = $15,600 pa.
Your Cash investment wont even cover your rent, in fact you will have to put in 4 1/2 grand to cover the rent.
Yes, its great to have cash but its exposed to tax and inflation. Believe me I know. This is only a suggestion & MPO go out and find a really nice place that you like. Make sure its not over priced. If its a little out of your price range great borrow the rest at current interest rates at a 45 year low. Its to be your PPOR so if prices drop a little so what you wont be forced to sell and you most prob. will live in it for 5 to 7 anyway. I don't think we can compare cash to property when we look at a PPOR.All the best
Regards
T……………Much appreciated everyone. Love hearing different views, mrs p
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