澳洲Australia property Investing question | Sydney


在澳大利亚 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 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


Hello All,

I'm still new to the investing game. I read some months ago an article in the Australia Property Investor (API).

The article was about Natalie Cook the Olympic gold medalist and it specifically spoke about and I quote "So rather than living in a home that she owns, Natalie now rents her PPOR".

It goes on further to say and i quote "My new strategy is to never buy the house that I live in," she says.

So my question is how would one achieve this? Would it be through an investor setting up a property investing company / trust and having that buy the house and then rent it from the trust or company? I would expect that certain legal tax structures which would be seen by the ATO as being acceptable would have to be setup.

I understand that I would need to seek legal and accounting advice.

I welcome advice from all who are a lot more experienced in the investing game and thank you for your time.  

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It just means that she rents like any other tenant does. It is almost always cheaper to rent than to pay off a PPOR. This frees up cash that can be used for other investments.  

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My strategy is the same.
I rent my place of residence. My borrowings are all 100% tax deductable.
This is a key component in my investment strategy and has allowed me to grow a large portfolio in a very short timeframe.
It's not the right strategy for everyone, but we are all taking our own path to our individual summit.  

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I am starting to come around more and more to this strategy.

I will have to move out of "house sitting" my parents' place while they are traveling late next year, then I'll be needing a PPoR.

Now if I accept that I will rent somewhere when that point comes, I can probably quite comfortably buy 2 IPs any time now. But if I expect to buy, then I only have room to purchase 1 IP as I will need to keep a chunk of equity free for the PPoR.

But answer me this: If you take this approach and choose just to rent your PPoR, why wouldn't you pay the same rent but into a new mortgage and just buy a really cheap/crappy PPoR?

I.e. Renting a 3 bed home vs buying a crappy 2 bed apartment but actually owning it for roughly the same weekly outlay.

Obviously it is a lifestyle decision and you have made the call that you need the 3 bed home for reasons such as kids, better location, backyard, no hassle, no reno/work required etc???  

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recruit2 said: ↑
But answer me this: If you take this approach and choose just to rent your PPoR, why wouldn't you pay the same rent but into a new mortgage and just buy a really cheap/crappy PPoR?Click to expand...
and why wouldn't you just rent a really cheap/crappy ppor? you are comparing renting an orange with buying an apple.  

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I thought that rent PPOR only apply in USA.

If anyone have chosen to rent their own investment property, this means that the property will be subject to CGT.

there is no other matters that we should be aware of?

t  

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Rob Williams said: ↑
My strategy is the same.
I rent my place of residence. My borrowings are all 100% tax deductable.
This is a key component in my investment strategy and has allowed me to grow a large portfolio in a very short timeframe.
It's not the right strategy for everyone, but we are all taking our own path to our individual summit.Click to expand...
Our borrowings are also all 100% tax deductable but we own our PPOR.

There are suburbs where if you do the calculations, its is cheapier to rent rather than to buy and live in. However, the opposite can also be true.

If you plan to move regularly and often, then renting may appeal rather to buy and sell regularly.

So best to work out where you want to live for the next several years and do your maths.  

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Ed Barton said: ↑
and why wouldn't you just rent a really cheap/crappy ppor? you are comparing renting an orange with buying an apple.Click to expand...
Yeah ok you're spot on.

But where do you draw the line kind of thing is probably what I'm really asking..

I.e. I could rent a cheap and nasty PPoR for say $250/wk, but buy a cheap and nasty one for $350/wk. Wouldn't it be worth just $100/wk outlay to actually buy something rather than renting.. Surely that $100/wk extra outlay would ultimately benefit you more over the longer term..? Totally CGT free..

All it needs to do is jump by $10k in value and you'd be ahead.. And you can be assured that will never happen with the one you're renting for $250/wk.  

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Hi recruit2,

I think of it this way, if I rent the cheap n nasty PPoR for $250/wk, i can use the extra $100/wk I save and fund an IP and the borrowings for this IP would be tax deductable.

The bank will also see that you have less expenditure and more income coming in (from rent, etc) and be willing to lend you more money for more IPs...and so on....

In regards to CGT, if the plan is to buy and hold then you'll probably won't sell so CGT would be minimal

I'm planning to rent too, while I build my asset base.  

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There is a lot of logic to doing this from a financial point of view but more factors come into place than just financials for most people. With 3 kids and all the bells and whistles in the back yard and schools etc unless I find a place that suited atleast 80% of the needs/wants of where I want to live I wouldn't do it plus the inconvenience of every year you may have to move. I go with the buy and live in a PPOR have the loan as interest only and have money in a offset account that offsets now a bulk of the loan and so if I want to move to another place I can and have not affected any future tax deductions

Jezza  

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I can see the argument for both sides, but I think I'll always be one of the ones who lives in a PPoR rather than rent. For personal reasons, plus it now financially suits me. I'm in Melbourne and bought my first PPoR just before a boom (and walked away with $140K tax free capital gain when I sold), and my second one (upgrade) just before a boom. This has allowed me to build up equity in my PPoR and for the sake of 10 years (where for some of that I was probably out of pocket vs. renting but never did real calculations as it was a non issue for me), I'm now at a point where my current PPoR is cheaper to pay P&I repayments than to rent the same place due to the increase in value. Now looking into the future, rents will increase but my repayments will stay the same or decrease with inflation and as I pay it off. Plus I like that warm fuzzy feeling of this is my place, I can do as I please for as long as I please.  

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