2 IPs or 1 home?

[schnugg]

This is my situation:

I have $165K to spend. Am self employed so income levels unstable but average conservatively $50K gross p.a. at the moment.

Option 1: Going half and purchasing a Sydney unit to live in with a family member, then pay off loan quickly, then buy an IP. Estimated loan for Sydney home $100K.

Option 2: forget Sydney home and buy 2 x IPs say in Brisbane.

I know personal preference (eg security of roof over head) etc will affect the decision making but which option makes more financial sense and would enable me to grow financially?

Any help is appreciated. Thanks!
Schnugg

 

[Les]

G'day Schnugg,

As a rough "rule of thumb", I would be in favour of an IP in preference to an "own home" - simply because of the TAX deductions you DO get with an IP vs the Tax deductions you DON'T get with your own home.

Yeah, it's simplistic - but run the numbers and make your call depending on what you want.

By way of further explanation, read Jan's book "Building Wealth - story by story" - in particular story #79 titled The Swap - it's a real eye-opener !!!!

Regards,

 

[Rolf Latham]

Hi Schnugg

Not clear cut because:

1. Being Self employed you can control the tax you pay
2 Much depends on where YOU think the market will go
3. If you investigate your options you might find you can actually do all 3, or at least one IP in Bris, with a 97 % I/O loan and then do the Sydney thing.

With 165 k to invest Im sure a good independent broker can show you a number of options.



Ta

Rolf