Hi folks,
I have a dilema. I have an IP in Doncaster and I am unsure as to whether I should demolish and build two townhouses on it or buy another IP for future Capital growth. It's a solid brick veneer 3 bedder. Cost of build will be about $750K. If I don't build, I'll spend that money(and maybe a little more) on my next IP, in a blue chip suburb.
I've tried to break it down a little to help me, but not sure it has helped that much!
Build 2 x townhouses:
- Advantages
* Better rents
* Better tenants
* Less maintenance
* Depreciation on new dwellings
* Will be positively geared from the start and will allow me to buy another property later anyway
- Disadvantages
* Dealing with a builder and the stress of it. But I am good with stress at least.
* Build time
* No income from the IP for say 1 year - no big deal
Buy another IP
- Advantages
* Good Capital growth (potentially)
- Disadvantages
* Low rental return in blue chip suburb
* Average tenants, as with $800k in blue chip, you won't get much of a house
* Maintenance will be pretty high, as it will be an older house
* My Land Tax bill will go up.
I keep thinking I should buy another IP, but I am sick and tired of maintaining properties and would rather just live the lifestyle I have created for myself. Lots and lots of fishing and 4WD'ing. Ie. I'd rather do this than to paint or change tap washes on the weekends! But at the same time, I want to do what's best for me financially.
Am I missing something obvious which determines which way I go?
Please advise. Thanks!
I have a dilema. I have an IP in Doncaster and I am unsure as to whether I should demolish and build two townhouses on it or buy another IP for future Capital growth. It's a solid brick veneer 3 bedder. Cost of build will be about $750K. If I don't build, I'll spend that money(and maybe a little more) on my next IP, in a blue chip suburb.
I've tried to break it down a little to help me, but not sure it has helped that much!
Build 2 x townhouses:
- Advantages
* Better rents
* Better tenants
* Less maintenance
* Depreciation on new dwellings
* Will be positively geared from the start and will allow me to buy another property later anyway
- Disadvantages
* Dealing with a builder and the stress of it. But I am good with stress at least.
* Build time
* No income from the IP for say 1 year - no big deal
Buy another IP
- Advantages
* Good Capital growth (potentially)
- Disadvantages
* Low rental return in blue chip suburb
* Average tenants, as with $800k in blue chip, you won't get much of a house
* Maintenance will be pretty high, as it will be an older house
* My Land Tax bill will go up.
I keep thinking I should buy another IP, but I am sick and tired of maintaining properties and would rather just live the lifestyle I have created for myself. Lots and lots of fishing and 4WD'ing. Ie. I'd rather do this than to paint or change tap washes on the weekends! But at the same time, I want to do what's best for me financially.
Am I missing something obvious which determines which way I go?
Please advise. Thanks!