在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m
Firstly, I have been lurking here for a while now, only recently registered. I have learnt plenty from the posters here yet I am still a real estate novice, the knowledge and input here from many posters is amazing, hoping you guys and gals can give me some advice and steer me in the right direction.
Currently, my wife and I own a $210k investment property in Parkes (central NSW) which we purchased while living their for 18 months for work. We have that on a P&I loan and have about $160k owing.
Currently we are renting in Sydney, we have two young bubs and so my wife won't return to work for a little while yet. The plan is to purchase our future home in Sydney in about 4-5 years when she returns to full time work. Nevertheless our accountant and another specialists we have spoken to suggest that we purchase an investment property in Sydney during that time to make better use of our money.
Furthermore, they recommend that we purchase the investment property ($300k) in the area that we plan on purchasing our future home in, that way we don't lose out on the relevant capital growth. The plan would then be to change the Parkes loan to interest only (thus making it positively geared) and putting the new property on a P&I loan and hammering that until we reach a stage to sell one of the properties to help with purchasing our future home.
I guess I have 2 main queries:
1) Does that seem like a reasonable approach?
2) is the theory of buying in the area we plan to live the best one or should we look to buy in an area with potentially more growth in those years (e.g. Western Sydney)
Any feedback or input would be greatly appreciated, thanks again.
Dre said: ↑
I guess I have 2 main queries:It may be a reasonable approach for YOU but it certainly would not be for ME. But I have a different income to you and a different risk profile. So you have to chart your own course. For example I only ever do IO loans never P&I. I don't see the point in paying off P. But then again I don't invest in areas like Parkes where CG could be a long time coming.
1) Does that seem like a reasonable approach?Click to expand...
Dre said: ↑
2) is the theory of buying in the area we plan to live the best one or should we look to buy in an area with potentially more growth in those years (e.g. Western Sydney)Click to expand...This is probably a good idea. If you want to buy a PPOR in the area, get in now and experience the CG and have an asset tied to that CG - so if it moved up substantially, then you will not be priced out of that particular market.
However, there may well be better areas to get CG - I could number quite a few. These would potentially be better to invest in. BUT, what if you (or me) are wrong. Then you miss CG where you thought it was going to be better and also miss out if it grows where you want to buy into.
You sound to me to be conservative, perhaps you'd be more comfortable going the conservative route and taking your advisor's advice.
All the best with it.
Thanks very much for your time and advice, much appreciated.
Yes I am a conservative, at the moment not really looking to build a huge investment portfolio, although it is something that interests me and the more I read about it the more I may go in that direction in the future. However this post relates to setting ourselves up to purchase our PPOR in the next 5 years.
Yes I am trying to stick to a low risk approach given we will only have one salary for a while. Regardless, do you think if this second property I plan to purchase may be sold within 5 years to fund our PPOR we should still do IO loan or better with a P&I loan to biuld equity for the PPOR?
Yeah the Parkes purchase was based more on us living there for a while and rather than paying rent and throwing money down the drain, we figured why not buy something, while the CG hasn't been good at all the yield is quite high (over 6%) and it will be positively geared once we change the loan to IO in January. By the way have yuo heard much about Parkes and whether CG may increase in the near future? I read that they recently approved a $90 million feasibility study to keep the mines open till 2044, this will hopefully create more jobs.
We plan to purchase our PPOR in southern Sydney (e.g. Rockdale, Hurstville, etc). With $300k we would be lucky to get a 1 bedroom unit, alternatively in Blacktown we could get a 3 bedroom townhouse. Obviously as you say there is risk inherent in shooting for higher CG in Blacktown and potentially losing out on market growth in our planned PPOR area, maybe you are right and we should take the safe option.
We will then have to make a decision as to whether we sell the place in Parkes (more yeild, lower CG) or the unit in southern Sydney.
Thanks again for your help, I really appreciated it
Dre said: ↑
Thanks very much for your time and advice, much appreciated.Click to expand...You're most welcome.
Dre said: ↑
Yes I am trying to stick to a low risk approach given we will only have one salary for a while. Regardless, do you think if this second property I plan to purchase may be sold within 5 years to fund our PPOR we should still do IO loan or better with a P&I loan to biuld equity for the PPOR?Click to expand...You should not ask me. I am not a fan of trying to build equity by paying P down on a loan.....so for me it's IO. If you want to save interest you should park any savings in an offset account.
Dre said: ↑
By the way have yuo heard much about Parkes and whether CG may increase in the near future?Click to expand...Even if I had 'heard' I would not take action based on possible future events - real or imagined. For me this is speculation and I'm conservative in this regard.
Attached is a CG chart showing the last 10 years comparing Parkes houses, Blacktown houses and Rockdale units FYI. Disclaimer: past performance no guarantee of future returns etc.