Buy investment or buy home??

[Nem]

First I have to mention how happy I am to discover SS forums... I've been reading it for few days constantly and there are some great advises here!!! So I thought maybe you can help me decide....
I have house in Sydney West, worth 750-800K and mortgage 380K

In 3 years time I want to move to Sydney South area, Carinbah, Sylvania and etc and houses there at the moment are 900K-1M

Should I

1. Buy investment property and sell in few years to be able to afford in my desired areas which sounds bit unreasonable

2. Sell my house in 3 years and buy in Sydney south

3. Buy now in Sydney south as an investment (using equity on the house), rent it out and in 3 years rent Sydney West house out and move to South??

Any advice would be very appreciated. Thank you, looking forward your replies

 

[ipinvestor]

I would go for option 3.

 

[Badger]

Would you be comfortable having tenants in your property that is also going to be your place of residence in the future? All the bells and Whistles on a property scream the word maintenance. I would be trying to hold on to your current Property in Sydney's West, and pay down the debt then when the time comes purchase in Sydneys south.

 

[knightm]

Would you be comfortable having tenants in your property that is also going to be your place of residence in the future? All the bells and Whistles on a property scream the word maintenance. I would be trying to hold on to your current Property in Sydney's West, and pay down the debt then when the time comes purchase in Sydneys south.

Sorry Badger, don't want to seem rude (and the brokers and accountants can have their say on this) but this is not very tax effective advice. (lots of people would follow this plan I just don't agree that its the best plan) OP will end up with an IP with NO mortgage, then a PPOR with a HUGE mortgage which is all NON deductible, and they have just signed up for another 15 yrs hard labour to pay off the PPOR. There are more tax effective ways.

and 900k in Caringbah or Sylvania doesn't get that many bells, perhaps 1 whistle (if your lucky).

any of the 3 options might work, the question is how much to you want to move there, how soon, and what kind of sacrifice do you want to make to get there?

 

[ZachAnSel]

First I have to mention how happy I am to discover SS forums... I've been reading it for few days constantly and there are some great advises here!!! So I thought maybe you can help me decide....
I have house in Sydney West, worth 750-800K and mortgage 380K

In 3 years time I want to move to Sydney South area, Carinbah, Sylvania and etc and houses there at the moment are 900K-1M

Should I

1. Buy investment property and sell in few years to be able to afford in my desired areas which sounds bit unreasonable

2. Sell my house in 3 years and buy in Sydney south

3. Buy now in Sydney south as an investment (using equity on the house), rent it out and in 3 years rent Sydney West house out and move to South??

Any advice would be very appreciated. Thank you, looking forward your replies

Hi Nem,

Welcome.. If I were you, I will step back and think what I really want to achieve in terms of big goal.

You mentioned that you want to move to South area where the price currently 1M within 3 Years.

From there lets track down which options will deliver you there in three years.

That's my first step, 2nd I will contact good broker to help not only valuation but also run plans with serviceability and equity to achieve your goal.

Step 3. Educate your self on the propery, from big picture like market cycle (sydney vs other cities), macro and micro economy - till how to DIY stuff/cosmetic reno.

Enjoy the ride, will leave the room for others to contribute...

 

[danwatto]

Option 4. Rent your dream home in the location of your choice, and invest multiple times in areas that make good investments, getting the full tax deductions on ALL your properties at the same time.

If you're thinking of any of those options though, read up heavily on the benefits of offset accounts in this forum, and the benefits of never selling property unless you're forced to.

 

[Redom]

Sorry Badger, don't want to seem rude (and the brokers and accountants can have their say on this) but this is not very tax effective advice. (lots of people would follow this plan I just don't agree that its the best plan) OP will end up with an IP with NO mortgage, then a PPOR with a HUGE mortgage which is all NON deductible, and they have just signed up for another 15 yrs hard labour to pay off the PPOR. There are more tax effective ways.

and 900k in Caringbah or Sylvania doesn't get that many bells, perhaps 1 whistle (if your lucky).

any of the 3 options might work, the question is how much to you want to move there, how soon, and what kind of sacrifice do you want to make to get there?

Good advice Knightm - while you can employ this strategy, you'd need to structure your mortgages carefully to avoid this scenario. Been a number of forums claiming early 'mistakes'. Can take years for an effective debt recycling strategy to overcome too.

 

[Redom]

Option 4. Rent your dream home in the location of your choice, and invest multiple times in areas that make good investments, getting the full tax deductions on ALL your properties at the same time.

If you're thinking of any of those options though, read up heavily on the benefits of offset accounts in this forum, and the benefits of never selling property unless you're forced to.

Haha I like it. This option sounds best for your living standards too.

 

[Nem]

Thank you all for your input!

I have been thinking about investing in property for long time but never took first step! The biggest dilemma now is that in 3 years my oldest kid is starting high school and that's why moving in Sydney South (I have 3 kids)

I agree that easiest would be to pay of this house as much as I can and then when ready to move, use equity and buy new house but reading all smart advices on this forums, it really got me thinking is it really worth it, wouldn't be better to invest somewhere and use tax offsets as my husband is on highest tax rates...

Biggest question is would it be better to invest in area with good return or buy house where I wana move

Do you think Sydney South prices will go up? Can you please help me understand bit more about strategies, how to get there where I wana be

Definitely looking for good broker who can help me organise best loan options for whatever I decide to do.

Renting in my desired area is something I thought about as well but dont think I can convince my husband to agree to that.

Looking forward your opinions and again, thank you for all your posts

 

[knightm]

The biggest dilemma now is that in 3 years my oldest kid is starting high school and that's why moving in Sydney South (I have 3 kids)

I guess 1 question is how big this issue is for you. Do you have 1 high school in mind? If so that makes a difference. Family trumps $ in my book so this might be more important than the "will sydney south grow" question. Which no one can perfectly answer (at least not with a guarantee) for you. Of course it is an area in demand, stock and rentals are still tight, and interest rates remain low so whilst all of Sydney is growing it will keep growing. When will it stop? Thats the tricky bit. But you need to be honest about your personal goals perhaps even more so than trying to play the market. If you really want something for your family, get clear on what that is first. Everything else wraps around that.

Once you have your goals clear, then the brokers and structuring questions can help. Those on this forum are generally above average. Redom has posted here, Jamie M is excellent, Peter T, Rolf, etc. They are all above the quality of backyard outfits.

 

[Nem]

I guess 1 question is how big this issue is for you. Do you have 1 high school in mind? If so that makes a difference. Family trumps $ in my book so this might be more important than the "will sydney south grow" question. Which no one can perfectly answer (at least not with a guarantee) for you. Of course it is an area in demand, stock and rentals are still tight, and interest rates remain low so whilst all of Sydney is growing it will keep growing. When will it stop? Thats the tricky bit. But you need to be honest about your personal goals perhaps even more so than trying to play the market. If you really want something for your family, get clear on what that is first. Everything else wraps around that.

Once you have your goals clear, then the brokers and structuring questions can help. Those on this forum are generally above average. Redom has posted here, Jamie M is excellent, Peter T, Rolf, etc. They are all above the quality of backyard outfits.

Thanks knightm, family is the most important and after some events happening in area where I leave, I decided to buy property in Sydney South asap!
I just need to figure it out what is the best way to do it

 

[Jaggannath]

Nem, there's some very clever people in this forum whose area of expertise is Sydney, and they can help you understand which structures to go for. Paul@PFI and TerryW are two who spring immediately to mind who can help you.

 

[knightm]

Thanks knightm, family is the most important and after some events happening in area where I leave, I decided to buy property in Sydney South asap!
I just need to figure it out what is the best way to do it

Simple option: sell Western Syd house, use proceeds to buy Southern Sydney house. Use equity in new house to invest in any location that suits after this.

Complex option: seek legal advice about a range of ideas/structures to manage tax deductibility to hold both properties without getting tax all inside out and upside down.