Hi,
I was hoping for some advice about my current plans. My wife and I currently own a 2 bed unit in Erskineville (Sydney) which has a market value of 800-850k. We purchased the property 2 years ago for 595K. We are currently looking at using this equity to purchase an IP with the intent of turning it into a PPOR in 2 years (put the saved money in the offset account of the unit while we live there with the intention to pay down the mortgage on the new PPOR when we move in)
The new IP/PPOR will be around the 1.4-1.5 mil mark. We have 280K of equity accessable (already available as a second mortgage to use as a deposit, we would pay this off first) and a current mortgage on the unit of 270k.
Now my question is, what to do with the current 2 bed unit when we move? Is it better to sell it and take the CG and reinvest into other IP's in other capital cities? I have come up with 2 options however I am unsure which one of them is the best:
1. Keep current unit as a positively geared IP (larger non-deductiable mortgage on new PPOR). Then use available equity in unit to purchase new IP's as we are able
2. Sell current unit and pay down new PPOR mortgage then use this equity to purchase IP's in different states (smaller non-deductable mortgage on PPOR)
The only downside to 2 is that the current apartment is in a prime location and will be very easy to rent and I believe even with a market downturn will retain good long term CG prospects. Also the idea of a property that pays for itself appeals to me as my end goal is to have a passive income from positively geared properties of around 100k in current dollars. I should mention that the unit is in my wife's name (lower income) and our combined income is around 300k a year.
Are there any options I haven't thought about or can anyone offer any advice with regards to our situation?
Cheers and thanks in advance
I was hoping for some advice about my current plans. My wife and I currently own a 2 bed unit in Erskineville (Sydney) which has a market value of 800-850k. We purchased the property 2 years ago for 595K. We are currently looking at using this equity to purchase an IP with the intent of turning it into a PPOR in 2 years (put the saved money in the offset account of the unit while we live there with the intention to pay down the mortgage on the new PPOR when we move in)
The new IP/PPOR will be around the 1.4-1.5 mil mark. We have 280K of equity accessable (already available as a second mortgage to use as a deposit, we would pay this off first) and a current mortgage on the unit of 270k.
Now my question is, what to do with the current 2 bed unit when we move? Is it better to sell it and take the CG and reinvest into other IP's in other capital cities? I have come up with 2 options however I am unsure which one of them is the best:
1. Keep current unit as a positively geared IP (larger non-deductiable mortgage on new PPOR). Then use available equity in unit to purchase new IP's as we are able
2. Sell current unit and pay down new PPOR mortgage then use this equity to purchase IP's in different states (smaller non-deductable mortgage on PPOR)
The only downside to 2 is that the current apartment is in a prime location and will be very easy to rent and I believe even with a market downturn will retain good long term CG prospects. Also the idea of a property that pays for itself appeals to me as my end goal is to have a passive income from positively geared properties of around 100k in current dollars. I should mention that the unit is in my wife's name (lower income) and our combined income is around 300k a year.
Are there any options I haven't thought about or can anyone offer any advice with regards to our situation?
Cheers and thanks in advance