澳洲Australia property to many options - not enough money | Sydn


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


haha - not really. problem is we have enough money to do one option - but not all three so just after some head clearing.

we have a fairly substaintial (for us) amount of $$ in a high interest acc. we have the option of:

keeping it in the account until ppor comes of fixed interest in 12 months time and then paying down the mortgage by 1/2.

using the money to complete renovations that will add $3 for every $1 spent and push the ppor up into the next value bracket ... have no time frame to sell the property - could be next year, could be in 10 years. we love the location but it is now massively too big for us (5/3/2 for hubby, i and 1x8yr old).

buy more cashflow neutral ip's.

the financial advisor is in favour of 1 ... i am in favour of 2 because the increase in value will mean we end up with massively more $$ in the pocket "when" we sell. and also really like 3 for obvious reasons.  

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lizzie said: ↑
haha - not really. problem is we have enough money to do one option - but not all three so just after some head clearing.

we have a fairly substaintial (for us) amount of $$ in a high interest acc. we have the option of:

keeping it in the account until ppor comes of fixed interest in 12 months time and then paying down the mortgage by 1/2.

using the money to complete renovations that will add $3 for every $1 spent and push the ppor up into the next value bracket ... have no time frame to sell the property - could be next year, could be in 10 years. we love the location but it is now massively too big for us (5/3/2 for hubby, i and 1x8yr old).

buy more cashflow neutral ip's.

the financial advisor is in favour of 1 ... i am in favour of 2 because the increase in value will mean we end up with massively more $$ in the pocket "when" we sell. and also really like 3 for obvious reasons.Click to expand...
I'd place it in an offset account against the PPOR mortgage for now, but would be inclined to complete renovations if I was certain about the $3 to $1 value (I remember you posted on a thread about this and know you know your stuff).

Why:

the return would be immediate, compared to leveraging on IP's and waiting for the market to rise(could be a while).

no CGT when selling.

you can enjoy a 'lifestyle' home - why not if you've earned it.

you can still accumulate cfn IP's (assuming your servicability is still fine).  

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What's the market going to do over the next 12 months? Will the same or similar opportunities still be available to you? What are the conciquences if you pull out of the fixed interest now.

I'd take the cash and pay down my mortgage. I'd then borrow it back via an investment loan and put it into the most approporiate investment or project.

You could do your reno, the redraw the equity again and then go for option 3.

The main question here is if you do it now or if you do this in 12 months. That depends on the conciquences of of taking your money now, and what the effect of waiting until next year will be.  

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I think that you need to forget about the future sale value of the property if you don't know when you are selling (forgetting about the redraw etc too).

If you don't sell for 10yrs then the new kitchen of today will be 10yrs old :)

It is $1 to $3 only if you want to sell or refinance as soon as it is done.  

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Lizzie posted a great piece here about renos, adding value and over/under capitalizing - I wish I could find it now but it would be too hard.

Depending on how a reno is done and where it's done would minimize this to a big extent. If you get that part right renovating your PPOR is far less risky/more profitable than a house than isn't.

We are doing a similar thing soon as the values around us are much higher than our home. One across from us is around 1M more, granted it's on bigger land (but not subdividable due to conservation zoning/council).

The kitchen and bathrooms are less significant features to a buyer when they're wanting to specifically buy the home for most of it's other aspects.

If those other aspects are done in a timeless and quality fashion, in line with other homes around you it shouldn't prove to be a major concern.  

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i suspect i need to give a bit more info.

the high interest account is paying nealy the same as the ppor mortgage interest rate (less than.5%) - so i don't want to break as an offset as the interest on the other 50% of the loan would be at more than .5% different.

the area we are in - bought for (choke choke) $1m. worth, in current state, $1.3mil. street is an old 1960-70's area, but is becoming at $2mil street for knockdown and rebuilds (next door cost $5.5mil for land and build!). to get close to the $2mil we need to renovate/remodel to bring the house up to standard 2011's standard rather than late 1980's - which is doable as the bones are very good.

however, hubby is now in his early 50's, so looking at retiring within 10yrs (i'm quite a big younger) ... peferably sooner ... so i want to build up a substaintial ip portfolio by 55, hold for 5 years then debt reduce at retirement. to me, substainial is around 20 ips to give us around 8-10 fully paid after debt reduction.

my way of thinking is that we can sell the ppor, pay out the mortgage, and still have plenty left over to buy (or build) a very darn nice house in a similar location - albeit a bit smaller. at the moment we have expansive ocean views which i am loathe to trade down from.  

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lizzie said: ↑
at the moment we have expansive ocean views which i am loathe to trade down from.Click to expand...
is it well above sea level (think tsunamis here) ?

If not, do it up and sell quick smart.

Otherwise I'd be using the cash to buy more IP's and ride the next wave (tsunami !!) into retirement and keep your views and be happy ever after...easy...!:)

Options will open up in 10yrs time for PPOR...don't worry...;)  

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Thorpey said: ↑
is it well above sea level (think tsunamis here) ?Click to expand...
yes - on a high ridge, at least 50+m above sea level, so no problems there :D  

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Yeah do the renovations!  

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