free comments aprecieated!!

just thinking out loud , as i continue to pay our PPOR mortage at 6k a month, the other half keeps on with the , "sell the home " as the mortgage is too large, argument!
i / we love this home ,built from scratch , and i built it to get larger equities, sooner.
we paid 437k for the block, and the last val was 1.5m , owing 950k at the moment, on IO finance. I think most homes in the area will be selling for about 900k perhaps in about 5 years time or so, and every one will have the same or similar mortage as us, income's will rise and house prices too! so i will continue to pay the 6k untill they do.
6k x 12 months is about, 72k a year, but our rates notice came yesterday and the UCV now stands at $ 609k up by 56k this year and 51k the previous year.:D
so to me its like spending 72k and getting some type of kick back of 56k so costing 16k and land banking the rest.:rolleyes:
so i did a data search on the UCV on this block, in 01 the UCV stood at $123k and the general rule of dbl prices in ten years seems not to apply here , as its not even 10 years yet and its already $609k . so all i can do is assume that in 2010 the UCV will be $660k and perhaps in five years being 2015 at around $920k which is 30k short of the current mortgage, :D hence having equities of about , 1.4m :D
 
Hiya CB

Cant help u with the hrowth argument, but perhaps one thing that you may need to address is the risk side of the deal................if rates got to 7.5 will you be ok and does that change your numbers at all ?

ta
rolf
 
Craig

If you sold your PPOR how much actual cash would you end up with?

Since you are a builder, I would say sell house (make a profit) and rebuild and sell next PPOR in a few years time.

Can you rent out your PPOR and the rent cover the loan?

6k x 12 = 72K - To me this would be a deposit for another IP every year at least.


Sheryn

I agree with wife
 
If most homes are going for 900 and yours is 1.5m do you think you have over capitalised a bit? If you can get 1.5 for it I am in agreement with your wife- sell it. take your tax free profit and do it again! and again! until you are debt free on your PPOR and able to buy lots of investments.

that's just my 2 cents worth:)
 
Sell, or rent it out. $6k a month on non deductable debt is not the path of wealth creation IMO.

I hate paying $3500 a month of fully tax deductible debt and no 'bad debt' - cant imagine what $6k must be like. I guess if you dont have children and you are a high income earner you can do it, but still.....

Obviously your wife isnt as ecstatic with the house (and its debt) as you are. Maybe she wants other options in her life.
 
Hi, you'd not have spent 500 thousand building the house so how many IPs is the 6K per month supporting?

KY

None - all the debt belongs to the PPOR! And $500k is eminently doable if building a large, good quality house. Crikeys, we got a quote for re-paving (ie using the same pavers for a very small area) and it was $15,000!
 
i wouldn't pay much attention to the ucv (govt valuation), as they are inverably wrong in comparison to what the market really is.

with out rented ppor the council rates valuation is around $300k LESS than what the block of land next door, and one 5 doors up, sold for at auction within the last 3 years - not that i'm telling them.

so, one would assume that if they can "under" estimate than they can also "over" estimate ... and ... at the end of the day, it doesn't tell you anything about what the market is prepared to pay.

i hate to rain on your parade, as you are obviously emotionally attached to this house - but i'd agree with the majority. sell, spend $700k (or so) on a nice place with minimal mortgage - and use the rest to invest.

when you can buy/build the $1.5mil house with less than a 50% mortgage (or preferably no mortgage) then go for it!
 
Thank you all , for your comments , you all sound like my sub consious, :D
yep build the pool and sell and move on , besides who needs 700m2 with three of us, :D
 
Sell, or rent it out. $6k a month on non deductable debt is not the path of wealth creation IMO.

I was thinking this while reading this thread.

Problem is, renting this house will get a rent return nowhere near the loan payment I'd say.

It all depends where you are in your life, your age and so on, but to me - as a 48 year old, $6k per month on a PPoR is not really the way to financial freedom in a hurry. It's a nice lifestyle statement though.

yeah, yeah; they earn stacks, so can afford it, so why not? Live life, enjoy your wealth and all that...

Thing is; most people don't even earn the $72k, and high-paying jobs are not always forever - despite what people believe. Things change, and can change very quickly.

All I can say is this; having been around for a decent while - if I was younger (and I'm assuming Craig is - most posters here seem to be younger and high-earning) and in a position to pay off a $6k per month mortgage, I would be buying a decent house with about a $2k or so mortgage, and putting the remaining $4k into the loan and smash it away in a few years instead of buying as much house as I can afford right now.

Why?

Because it is non-deductible, waste of money interest, and can be put to work in a far better way and make you extremely wealthy in 10 or so years.

The balance of this mortgage - $4k - over the term of the loan if it goes to the full 25 years (or probably 30?) would buy at least one more decent house, pay all the kids' schooling and so on.

Just because you can pay the $6k, it doesn't mean you should - unless you want to work in a PAYE job until retirement age to fund it.

Something to think about.
 
Craig, as this is your PPOR then obviously factors other than purely financial come into play.

If this is your only asset, then it may well pay you to sell up and spread your money into a PPOR and investments.

But if your overall position is sound, and you have investments working for you as well as your PPOR, AND you can afford to live there, then maybe you should stay.

Heck, hubby and I are now on our own as the kids have grown and left, we are in a 4 bed 2 bath house that would rent for around $500 or $600 per week if not more. Clearly we would be better off financially if we rented it out and moved into a rented 1 bed unit, but equally clearly we don't want to, don't have to and don't intend to.
Marg
 
same posi as us craigb.

i'm buying up CF+ properties with high growth properties to offset my high mortgage.

make everything more serviceable - maybe that'd be a better idea....?
 
Yep me too.

I mortgaged high growth PPOR to purchase IP's, plan to stay for growth period again, sell on high...rent...... maybe buy more IP, pay as much as I can into lowering LVR's and buy PPOR again on low.

The buy again on low part will hopefully see me with a much lower mortgage, a much better cashflow and set me up for the next "recession.":eek:

Regards JO
 
Yep me too.

I mortgaged high growth PPOR to purchase IP's, plan to stay for growth period again, sell on high...rent...... maybe buy more IP, pay as much as I can into lowering LVR's and buy PPOR again on low.

The buy again on low part will hopefully see me with a much lower mortgage, a much better cashflow and set me up for the next "recession.":eek:

Regards JO

good one!!!

i realised that mys strategy of (high growth + high cashflow + repeat) actually applies to my PPOR.

my PPOR is what i consder high growth. a karratha property i believe is high growth and VERY high yield - so that would be phase one.

let them grow over the year and get looking again - or if any great CF+ deals come up, pick up a few throughout the year to pay for another growth property next year.
 
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