Hey everyone, first time poster, have been doing alot of research lately and would like to get opinions from people who have ‘been there, done that’…
Im 21 years old, have done all the right things saved all my wages and bought my first home. I’ve served my 6 month stint to keep the first home buyers grant and now am thinking of moving back in with mum and dad and listing my property as a rental and turning it into an investment.
The property is located in Frankston, Victoria (karingal if anyone knows the area), 3 bed, 1 bath, pool, lock up garage purchased for $310k and having had a close eye on the market for the last 12 months I am fairly confident it would sell for something round $330ish.
My questions are…
Should I sell now take out my possible 20k and avoid capital gains tax and then re-invest? or would costs assosiated with re-investing (stamp duty, loan fees etc.) make it not worth while.Or… Am I best to move home, put as much money into my loan as I can, negative gear it and then re-assess in 12 months time and use the equity in this property to try and get a second?
Any advice, ideas or tips would be GREATLY appreciated!
Thanks, Matt
Just remember the costs of selling. Conveyancers fees, Real estate fees etc. That would eat up a lot of the 20k profit if you cna get it to sell for 330k. Another thing to consider is will the area be going up more in the future? maybe just holding onto it for another year or so would produce a better profit. Just something to think about, but good luck with everything and good to see more people my age investing
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
hey matt,
yeah i agree with tony selling now may eat into your profit to much maybe hanging onto it for another 12mths saving while your at your parents you can tap into the equity to purchase another property. mean while gotto love living with your parents enjoy the home cooked meals.
Corza
Selling allows you to realise your profit however the exit & reentry costs really hammer your returns. You may be best served by holding on to this one & ploughing you money back into your offset account for use elsewhere later on.
Hey Matt,
I'm in Frankston too. good to know people are in the area with the same ideas.I got a room mate to help me pay off some of the mortgage and am going through the house renovating.
Trying to get some more equity in the place.Something else to think about,
joehann.
If you are young and single getting a room mate seems like a good idea – I would have done this if I had a house at the age of 20. Something not practical when you have a family! you are paying for so many mouths to feed its a big responsibility.
Did you buy your home with a home owners grant? That would have been good back in my day haha
as others have said not much profit in selling.
Actually you will be worse off if you sell and buy again. Can't see the point unless the property you have chosen is not likely to get CG.
$20K – selling fees ($6k) gives you $14k. How much did it cost you to buy the property? $2K solicitor? Loan establishment fees, exit fees ($1K+) You'll be lucky to have $10K in your hand.
Not enough to even pay the stamp duty on the next house.Either move in with mum and dad or get a boarder (as suggested). But factor in the capital gains implications if you declare the boarder, however you can rent it for 6 years (if you move out) with no capital gains payable under the 6 year rule.
BTW do NOT pay down the loan. Use an offset account.
cappy88 wrote:Hey everyone, first time poster, have been doing alot of research lately and would like to get opinions from people who have ‘been there, done that’…Im 21 years old, have done all the right things saved all my wages and bought my first home. I’ve served my 6 month stint to keep the first home buyers grant and now am thinking of moving back in with mum and dad and listing my property as a rental and turning it into an investment.
The property is located in Frankston, Victoria (karingal if anyone knows the area), 3 bed, 1 bath, pool, lock up garage purchased for $310k and having had a close eye on the market for the last 12 months I am fairly confident it would sell for something round $330ish.
My questions are…
Should I sell now take out my possible 20k and avoid capital gains tax and then re-invest? or would costs assosiated with re-investing (stamp duty, loan fees etc.) make it not worth while.Or… Am I best to move home, put as much money into my loan as I can, negative gear it and then re-assess in 12 months time and use the equity in this property to try and get a second?
Any advice, ideas or tips would be GREATLY appreciated!
Thanks, Matt
If it were me I would go with your first suggestion, rent it out, access the equity to fund the deposit and costs and buy another investment property. Its the size of your asset that gives you the return and the best time to buy property is asap because the market constantly moves up over time (generally – depending on where you buy) . If you can get into the market now then don t hold back. By the way this is not advise. There are some great areas to invest in right now.
Thanks everyone for the advice I think I’ll be holding onto the property with an offset account.
And I also have an undeclared boarder living with me currently and have done minor renos (been a carpenter helps ) as Johanne and a couple others have sujested.Thanks again everyone, only came across this site a couple of days ago and I think I’ll be hanging round for a while!
Hi guys, just out of interest why are people advising not to pay off the loan but use an offset account ?
Hi g0biin
This is been covered heaps in the last few weeks – do a quick search on "offset" and you'll find loads of info.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Jamie
Thanks for that. I understand what an offset account is and know how to use the search functionality in the website.What's the benefit of an offset as opposed to paying the loan down. The interest you save on the offset account would be the same if you pay it directly on the loan and you can just redraw the money when needed from the loan. Some banks may charge a redraw fee for that. Mine doesn't. (scrapped recently)
I know there is some tax benefits to having an offset account but my understanding is that you would lose those benefits because a bank will charge you slightly higher interest rate on your loan because of the offset account? Maybe that's what people don't get?
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