To buy an I.P or Renovate my own house?

[COLO]

My partner and I have been trying to decide whether to buy an investment property in Western Sydney, either St Clair, Erskine Park, Colyton or Claremont Meadows area or renovate our own place in Colyton. Being young and not in the property game I'm not to sure on what would be better for us in the long term? Any opinions?

 

[Rolf Latham]

Hi colo

Welcome

In general, buying an IP will provide more benefit in the long term becasue the debt will be tax deductible against the income received from the IP.

Thats not the case with renovating your own home.

Having said that, its hard to provide any strong opinion on the data provided..............one would need a lot more detail

ta

rolf

 

[Ace in the Hole]

Buying an investmeny property vs improving your own home are very different activities.

Short answer, buying an investment property will be better for you financially in the long term, which is what you asked.

Of course there are many other factors to consider here too, like income levels, savings, long term goals and plans.

 

[Propertunity]

My partner and I have been trying to decide whether to buy an investment property in Western Sydney, either St Clair, Erskine Park, Colyton or Claremont Meadows area or renovate our own place in Colyton. Being young and not in the property game I'm not to sure on what would be better for us in the long term?

Why not do both?

This is how I got started. I reno'd my own place to increase its value. Then got a valuer out to give me a new valuation. I then used that at the bank to draw out enough equity in the form of cash, to use as a deposit on an investment property (IP).

Then do the same thing with the IP and start building a portfolio.

 

[Jamie M]

I agree with Prop. You can have your cake and eat it too. Renovate your home (try not to over capitalise), then have it revalued - hopefully there will be some manufactured equity there that you can access for IP 1.

Cheers

Jamie

 

[COLO]

Thanks for all your answers. I really appreciate it.
To give you a better indication on the position I'm in. We bought in Colyton for $270,000 (mortgagee in poss.) 4 years ago. Great little 3 bedda on a 670sqm block. We have spent roughly $10,000 to $12,000 on landscaping, paint, roof re-spray and I put a 13 meter by 4 meter deck out the backyard and new fences.
We are looking to do bathroom, kitchen, floors and finish the backyard with a pool and landscaping in the next 6 months or buy a I.P?

I believe our place is easily valued at $320,000 to $340,000 just looking at whats selling around us. It could be as much as $360,000.

I have found some great properties I believe would be a good investment, I guess we just have to decide. Going off your responses, Investing is definitely the way to go or both (just might take longer).

Thanks again.

 

[Propertunity]

We are looking to do bathroom, kitchen, floors and finish the backyard with a pool and landscaping in the next 6 months or buy a I.P?

All of the things you have done so far are good value-adds. What you propose to do on the bathroom, kitchen & floors are good value-adds also.

However, the pool, not so much. Do it for your own enjoyment for sure. But a pool adds less value than it costs and in many cases reduces your property's appeal to a large segment of the market should you ever decide to sell.

 

[investor2009]

I'd do both.

Renovate, then pull the increased equity to make it tax deductible/purchase investment property.
Win Win.

 

[china]

renovation is difficult

Renovating to add value to a property only works if you have the skills to do the work yourself and pay only for materials. If you actually have to pay someone to do the painting, flooring, deck construction, then there is no way that the value can be recouped.

 

[Focus]

Agree with doing both but unsure to the actual cash out benefit of the reno's. If the place was a "dump" to start with it might generate more $$$.