Shop & residence combined

[july]

Hi
I am thinking about selling my ppor and purchasing a residence above a shop. I would live in the residence and the shop would be leased independantly. Just wondering if anyone else has done this and found it to be worthwhile, I mean, selling the ppor (not really enough equity in it to draw out to purchase the shop and residence) and purchasing a property that draws two income streams. Also, would this be a commercial or residential loan or could it be split?
Thanks

[geoffw]

Hi July,

The last time I looked into buying one of these (18 months ago) my lending institution treated it as commercial for purposes of loan terms. That was that they required a 30% deposit, and a principal and interest loan with a ten year term. That would have meant, for me, capital repayments per month 30% higher than interest payments. That did not suit my cashflow at all.

There are many institutions out there- there may well be one which will split.

I'd be inclined to keep the ppor and buy a smaller IP. Selling costs and buying costs will take a fair whack out of your equity anyway, so you may not gain that much by selling.

[Sunstone]

Dear July,

I would agree with Geoff. Getting a smaller IP to start off with rather than selling your PPOR I believe is the way to go.

A combined shop/residence is better suited to the owner operator who wants to reduce the amount of time taken for them to travel to work and also decreases the amount of labour required to run a store and so decreases fixed costs.

(Practical for a mixed business grocery retail, fast food etc.)

However I never discourage thought about multiple income streams. Maybe you can apply this thinking to another opportunity.

Cheers,

Sunstone.