澳洲Australia property Sell Investement unit, Reno or sell PPOR


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


Hi Guys... first post.... I'm after some constructive advice.... tossing around a few ideas.
Current holdings:
2 bed Investement unit in Marrickville (inner west sydney), Purchased 6 years ago $310k; now worth about $450k, $200k equity, lived in it for 2 years, positively geared. >> likely to continue to appreciate (?)
PPOR in leafy Bardwell Park (inner South West Sydney) 3 beds: Purchased 2 years ago $640k, currently worth approx. $790k; equity approx. $180k.

Situation: Noisy neighbours are going to drive us crazy (5 kids and pool). :eek: Cash flow is very tight. PPOR interest and principle is being maintained (just). Investment unit brings in minimal income but is appreciating nicely with good tenants.

Goal: Live more comfortably (and quietly) but still build equity... and ideally have a passive income to allow me to work less!!!

So..... we're considering selling the investement unit (arghhhh) - good time or bad time? Keeping in mind the end of the FHOG could spark a rush in this price bracket. Will prices flatten out for a while meaning now could be a good time??

If we sell we may then either:
a) renovate PPOR: to add some space and block some neighbour noise
b) Sell PPOR: and buy another house in a quiter spot nearby for approx. $850k

Open to any ideas or different strategies... thanks in advance!  

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You would obviously need to run the numbers but another option could be:

Keep Marrickville

Change Bardwell Park to Interest only and rent it out

Rent a house to live in for you and your family  

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Roosterman said: ↑
You would obviously need to run the numbers but another option could be:

Keep Marrickville

Change Bardwell Park to Interest only and rent it out

Rent a house to live in for you and your familyClick to expand...
This has crossed my mind. the risk is the instability of renting. And whether this would actually make my cashflow situation worse (I'm not really an expert on running the numbers, it does my head in a bit!)... I'd guess holding both given the costs (stamp duty / cgt etc) and future appreciation might put us in a better position down the track... but at what cost to lifestyle?  

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MaddogX said: ↑
... but at what cost to lifestyle?Click to expand...
No pain, no gain....no one started making money while doing nothing.  

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Not afraid of some pain.... I'm just seeking something a bit more manageable... Would anyone recommend switching the PPOR over to an interest only option while still living in it?  

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MaddogX said: ↑
Would anyone recommend switching the PPOR over to an interest only option while still living in it?Click to expand...
Yes, for reasons I outlined on this older post:
http://www.somersoft.com/forums/showpost.php?p=522216&postcount=2  

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roll it all over to IO !

ta

rolf  

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Roll it over to IO if you are disciplined enough to keep putting away an equivalent amount to the P+I amount in the offset.

If you're going to fritter it away otherwise, and see PI as "enforced savings", I'd think twice.

PS. Welcome to SS!  

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thanks for the welcome.... and tips thus far...

I can see the wisdon of rolling my PPOR over to IO but still saving the additional amount in an offset account it still doesn't help my cashflow situation. Or have I missed something there?

What about capitalizing interest by using a LOC? I've read some on this strategy and it's somewhat confusing but it does seem to make some sense....  

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Don't capitalise interest - it is a bad idea for tax reasons AND it's only a good idea for commercial/development financing where preservation of cashflow is a top priority.

IO would help your cashflow situation because the payments on IO are lower. You can make voluntary payments to pay off your principal by putting excess savings into an offset account. Given your current PPOR mortgage is ~$600k, on an IO loan your monthly repayments are $3,500. On a PI Loan, the monthly repayments are $3,992. So that's almost $500 a month less...  

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The IO options on my PPOR sounds feasible.... but as stated I'll need to be cautious on dipping into the Offset account too much. OR could I just maintain IO on both properties and just rely on Capital Gains to increase equity (while trying to save some $'s where possible in the offset account)?

My only concern with this is that I believe I should really be paying down as much of the non-deductible PPOR debt as a priority (after the credit card of course).  

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Just reading another forum and a post by JINGO..... BTW I'm leaning away from selling IP...

What are peoples thoughts on this strategy to restructure my finances???
Aim is to free up some cashflow for day to day living... while still realising CG on two properties...

- Set up an offset account against PPOR loan and change to IO.
- Set up a LOC against the IP (already IO) and use this to pay investment loan.
- Put the rent received from investment property and any other cash into the offset account on PPOR loan.

Or will this still leave me no better off from a servicing perspective with the new LOC??  

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Hmm I personally am not a fan of establishing dozens of LOCs to pay your investment loans etc. It's best to keep things simple as long as the structure is correct.  

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MaddogX said: ↑
Hi Guys... first post.... I'm after some constructive advice.... tossing around a few ideas.Click to expand...
Hi MaddogX,

I'd be looking to achieve a more comfortable life for you and your family - and doing whatever it takes to achieve this. If it means selling the investment property, so be it - or downsizing your PPOR - then I'd do it.


MaddogX said: ↑
Current holdings:
2 bed Investement unit in Marrickville (inner west sydney), Purchased 6 years ago $310k; now worth about $450k, $200k equity, lived in it for 2 years, positively geared. >> likely to continue to appreciate (?)Click to expand...
Maddog - this sounds like a good investment. How much rent do you receive from this? When you say it is positively geared - does the rent cover the mortgage payments as well as the ongoing costs (rates, water, etc, etc)

On the surface, this looks like a good investment.


MaddogX said: ↑
PPOR in leafy Bardwell Park (inner South West Sydney) 3 beds: Purchased 2 years ago $640k, currently worth approx. $790k; equity approx. $180k.

Situation: Noisy neighbours are going to drive us crazy (5 kids and pool). :eek: Cash flow is very tight. PPOR interest and principle is being maintained (just). Investment unit brings in minimal income but is appreciating nicely with good tenants.

Goal: Live more comfortably (and quietly) but still build equity... and ideally have a passive income to allow me to work less!!!Click to expand...
Seems as though the PPOR is causing you the problem. Without looking at any repayment figures or costs, it seems that this is the property sucking up your cash flow.

Is it possible to sell this property and downsize? Concentrate on paying down the mortgage on a new, cheaper PPOR? (Perhaps in another area?)

The other alternative, as you mention, would be to sell the investment property. But you will be paying capital gains tax on the gain (which would be a waste of equity). It seems ashame to sell down a positively geared property.

At the end of the day it is your call - look closely at your figures to guide you on your decision.


Regards Jason.  

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MaddogX said: ↑
Just reading another forum and a post by JINGO..... BTW I'm leaning away from selling IP...

What are peoples thoughts on this strategy to restructure my finances???
Aim is to free up some cashflow for day to day living... while still realising CG on two properties...

- Set up an offset account against PPOR loan and change to IO.
- Set up a LOC against the IP (already IO) and use this to pay investment loan.
- Put the rent received from investment property and any other cash into the offset account on PPOR loan.

Or will this still leave me no better off from a servicing perspective with the new LOC??Click to expand...
This structure will work best if you have multiple IP's and your cashflow is strong. It is intended to turn non deductible debt into deductible debt. Wouldn't recommend it in your situation. It will possibly put you under further stress....

Regards Jason.  

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Hi Jingo.

Can we use normal offset accounts against these IPs? as LOC may be more expensive (IR). So the IO payment to the IPs just simply redrawn from the corresponding IP offset account ?

Regards  

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sentsie said: ↑
Hi Jingo.

Can we use normal offset accounts against these IPs? as LOC may be more expensive (IR). So the IO payment to the IPs just simply redrawn from the corresponding IP offset account ?

RegardsClick to expand...

Yes, you can use an offset account against an IP loan - including interest only loans.

The only time you couldn't use an offset account is if you are pre-paying interest in advance ie one lump sum before the end of a tax year.

Regards Jason.  

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jingo said: ↑
This structure will work best if you have multiple IP's and your cashflow is strong. It is intended to turn non deductible debt into deductible debt. Wouldn't recommend it in your situation. It will possibly put you under further stress....

Regards Jason.Click to expand...
thanks Jingo... good clarification... won't head down this path...  

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