1 PPOR or 2 IP and keep renting

[Zos]

I know this is probably a question for a financial adviser but there are a lot of switched on people here.

Would you buy 1 PPOR around the 600k mark (Aspendale gardens, Carrum, Chelsea, Chelsea Heights, Bonbeach) or would you buy 2 IP at around 340k each (thinking Frankston area). Time frame I am thinking 5 to max 10 years. The IP properties would be larger blocks around the 650-700sqm. Possibly could squeeze into the FHS zone but not at 340K each more like 400-440k.

Cash 170k
Interest only repayments currently at 5.3% with offset account
Earning 130k a year

Basically I figured 340k total cost of IP including stamp duty etc.

510k loan after using the 170k as deposit and putting it into the offset account.

$27.6k yearly interest only repayments
$33.3k rent revenue
$5.7k cash flow which would turn out to be zero after taking away rates and real estate looking after fees.

With all that keep renting myself at around $25k per year.

Or would I be better off buying my PPOR use the 170k cash towards it via offset account after paying deposit. Being able to put the 25k towards my PPOR instead of paying rent and never seeing the money again.

I guess it all depends where the CG growth will be at. Am I betting on Frankston or not I guess it boils down to.

It is not a place I would like to live myself. I walk through there daily and there is always something happening women with a smashed in face, fights breaking out, rats with wings everywhere (seagulls). But I can see some potential there in the long term not sure if 5-10 years is enough though. How long can a suburb by the bay be so much cheaper than everywhere else the catch up is bound to happen just a matter of time but how much time..

 

[marg4000]

This is a personal decision and when it comes to where you will live then you are the only one who can decide.

Some choose on financial reasons, others on emotional ones.

Neither is right or wrong, just what is right for YOU.
Marg

 

[Rolf Latham]

At least some of this is a non financial question.

For some peops long term rental is an absolute
No no

Ta

Rolf

 

[Demoivre]

I know this is probably a question for a financial adviser but there are a lot of switched on people here.

Would you buy 1 PPOR around the 600k mark (Aspendale gardens, Carrum, Chelsea, Chelsea Heights, Bonbeach) or would you buy 2 IP at around 340k each (thinking Frankston area). Time frame I am thinking 5 to max 10 years. The IP properties would be larger blocks around the 650-700sqm. Possibly could squeeze into the FHS zone but not at 340K each more like 400-440k.

Cash 170k
Interest only repayments currently at 5.3% with offset account
Earning 130k a year

Basically I figured 340k total cost of IP including stamp duty etc.

510k loan after using the 170k as deposit and putting it into the offset account.

$27.6k yearly interest only repayments
$33.3k rent revenue
$5.7k cash flow which would turn out to be zero after taking away rates and real estate looking after fees.

With all that keep renting myself at around $25k per year.

Or would I be better off buying my PPOR use the 170k cash towards it via offset account after paying deposit. Being able to put the 25k towards my PPOR instead of paying rent and never seeing the money again.

I guess it all depends where the CG growth will be at. Am I betting on Frankston or not I guess it boils down to.

It is not a place I would like to live myself. I walk through there daily and there is always something happening women with a smashed in face, fights breaking out, rats with wings everywhere (seagulls). But I can see some potential there in the long term not sure if 5-10 years is enough though. How long can a suburb by the bay be so much cheaper than everywhere else the catch up is bound to happen just a matter of time but how much time..

If I was in your position, it would be whether the decisions I make will fit into my lifestyle, i.e. relationship status, children, holidays, wants etc.

Personally I would rather have two properties than one, unless I'm dead set on living at that PPoR for the next 10+ years.

Its my 2cents worth

 

[Demoivre]

This is a personal decision and when it comes to where you will live then you are the only one who can decide.

Some choose on financial reasons, others on emotional ones.

Neither is right or wrong, just what is right for YOU.
Marg

marg4000 beat me to it

 

[Moneyman_85]

I had the same question before I purchased my IP's

The way I see it is basically the interest you pay on the ppor you don't see anyway. So what's the difference in renting vs owning (from a financial pov)

I would rather 5 IP's in good areas to 1 house in an area I can just afford

But that's me

Seniors of SS feel free to shoot my theory down

 

[athsaki]

I know this is probably a question for a financial adviser but there are a lot of switched on people here.

Would you buy 1 PPOR around the 600k mark (Aspendale gardens, Carrum, Chelsea, Chelsea Heights, Bonbeach) or would you buy 2 IP at around 340k each (thinking Frankston area). Time frame I am thinking 5 to max 10 years. The IP properties would be larger blocks around the 650-700sqm. Possibly could squeeze into the FHS zone but not at 340K each more like 400-440k.

Cash 170k
Interest only repayments currently at 5.3% with offset account
Earning 130k a year

Basically I figured 340k total cost of IP including stamp duty etc.

510k loan after using the 170k as deposit and putting it into the offset account.

$27.6k yearly interest only repayments
$33.3k rent revenue
$5.7k cash flow which would turn out to be zero after taking away rates and real estate looking after fees.

With all that keep renting myself at around $25k per year.

Or would I be better off buying my PPOR use the 170k cash towards it via offset account after paying deposit. Being able to put the 25k towards my PPOR instead of paying rent and never seeing the money again.

I guess it all depends where the CG growth will be at. Am I betting on Frankston or not I guess it boils down to.

It is not a place I would like to live myself. I walk through there daily and there is always something happening women with a smashed in face, fights breaking out, rats with wings everywhere (seagulls). But I can see some potential there in the long term not sure if 5-10 years is enough though. How long can a suburb by the bay be so much cheaper than everywhere else the catch up is bound to happen just a matter of time but how much time..

Why would you take out an interest only loan at 5.3% when you can get a principal and interest loan for under 5%?

Me personally I would buy two properties rather than one. I believe you are correct Frankston will play catch up with the rest of the state its only a matter of time, that is where I am investing at the moment.

 

[The Y-man]

I had the same question before I purchased my IP's

The way I see it is basically the interest you pay on the ppor you don't see anyway. So what's the difference in renting vs owning (from a financial pov)

I would rather 5 IP's in good Cap Growth areas to 1 house in an area (that may not be of good cap growth) I can just afford

But that's me

Seniors of SS feel free to shoot my theory down

I'd agree basically but add in the bolded words....

The Y-man

 

[Big Will]

It is not a place I would like to live myself. I walk through there daily and there is always something happening women with a smashed in face, fights breaking out, rats with wings everywhere (seagulls). But I can see some potential there in the long term not sure if 5-10 years is enough though. How long can a suburb by the bay be so much cheaper than everywhere else the catch up is bound to happen just a matter of time but how much time..

I live by the rule, if I cant live in the property then what sort of tenant would I be attracting?

I use this rule as I don't want walls being kicked in or tenants skipping etc etc.

If I can live in the property then there is a higher chance of having a decent tenant who has self respect and will look after the property like their home and not be someone who doesn't care about the property besides when their next government payment is coming.

This is for all suburbs, if I couldn't live in a place in Toorak I wouldn't buy it. I wouldn't buy in toorak but that is another story lol, unless there is some great buy.

 

[Moneyman_85]

Cheers Mr Y

 

[Zos]

Why would you take out an interest only loan at 5.3% when you can get a principal and interest loan for under 5%?

Me personally I would buy two properties rather than one. I believe you are correct Frankston will play catch up with the rest of the state its only a matter of time, that is where I am investing at the moment.

For my situation I had to go with CBA that is 5.3% with offset account.

I agree with the other poster that interest money is like rent money. But if your own home you can do what you want with it. Rent and you can't hang a picture up.

Gonna have to think about this real hard.