LMI or bigger deposit?

Hi folks,

I've been lurking here for the last 3 years but only recently signed up.

My wife and I have recently exchanged on a PPOR in Anna Bay. We have a house in Medowie that we had planned on converting to an investment however we came unstuck with a lower valuation than we needed to get the Anna Bay house.

Coincidentally, we got offered about $16k above the valuation and are about to go unconditional tomorrow (or so I'm told). I'm not worried if it doesn't sell as we have formal approval for the Anna Bay house so that will go ahead if the buyer falls through.

Basically, if the sale goes ahead we will have about $25k left over and I'm not sure how I want to use this. We could put $14k towards the deposit to the Anna Bay house and save around $5k in LMI, or cop the LMI and put the extra towards the next IP.

The other option is to renovate the new place which we will do at some stage either way but having recently renovated the Medowie house I would rather live in a finished home for a couple of years than rip it apart as soon as we move in.

The Scottish side of me is saying to pay the extra to save on LMI, my wife is saying pocket it and renovate/buy furniture. I also have a business that could do a lot with $25k but I would like to have a second IP under my belt soon too and with a $25k headstart I should be able to double that in 12 months. What would you do?
 
$25k probably isn't going to stretch too far towards an IP purchase unless you're looking to buy something that's quite cheap.

If the renos in the house are mainly cosmetic - then you could do a fair bit with $25k.

Do you have additional savings beyond the $25k? If not - I'd be inclined to hold onto the funds and put a portion towards renos and keep the rest for emergencies.

Cheers

Jamie
 
We won't need much money to set up home in the new place. My wife has priced up all the extras she needs or wants to replace and it comes to about $3k.

We're planning on renovating the kitchen which involves removing a non load bearing wall, something I haven't done in a steel framed house before so that will involve a learning curve, and changing the 3 way bathroom and ensuite into a bathroom, ensuite and walk in wardrobe. I don't want to throw too much at it just yet, need to make sure the market is moving as I suspect it finally is. We'll do simple things like paint and light fittings in the next few months but the rest is for the future. Last house we renovated I had a 1 year old helping me, this time I'll have a 1yo and a 3yo.

I have another $9k on its way and should be able to save another $25k over the next 12 months or less which is when I'd be starting to look at another purchase. Hoping to keep it around the $400k mark but have also been considering around $250k in Raymond Terrace seeing as it's local, cheap and has more of a stigma than it deserves in my opinion. (Not saying it's a nice neighborhood yet but it's much better than it was 5 years ago.)

Terry, that was my line of thinking but my wife is harder to convince.
 
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