What did you do first? PPOR or IP?

[azzae89]

I'd like to know from people with experience in purchasing their first property, of what TYPE they opted for - a PPOR or IP... but more importantly, how happy they were with their decision down the track?

I'm still living with my parents, but am tossing up whether to buy a PPOR or IP (i live in NSW) - but would like to know from people who went down a similar path, how it turned out for them, and if they could have their time over what they would do?

Cheers!

 

[The Fence]

PPOR with the intent to transform into IP.

Worked a treat and is still to this day the keystone property in our lot.

Spent a couple years there as PPOR then extended/reno then let out.

Has been the main source of equity build up and withdrawal ever since.

 

[eeho]

I bought a house and land package in the suburbs with the intention of it being a PPOR. Then there was a delay in construction, and ending of my previous lease and I ended up renting a townhouse with a friend in the city. 2.5 years later I'm still in the townhouse and now own three properties that are all rented to lovely tenants!

 

[alexlee]

You can only have one PPOR at a time.

You can have multiple IPs.

IPs are scaleable. PPOR is not. Financially, IPs win. Emotionally...... that's up to you. If you're young, does a PPOR make sense? You might move areas, cities, etc for jobs, partners, etc. The sort of property you want to live in now will not be what you want to live in in a few years. If it costs more to buy than rent (as is likely to be the case), why buy a PPOR now?

 

[azzae89]

You can only have one PPOR at a time.

You can have multiple IPs.

IPs are scaleable. PPOR is not. Financially, IPs win. Emotionally...... that's up to you. If you're young, does a PPOR make sense? You might move areas, cities, etc for jobs, partners, etc. The sort of property you want to live in now will not be what you want to live in in a few years. If it costs more to buy than rent (as is likely to be the case), why buy a PPOR now?

Some really good advice there thanks. I'm 23, so could probably do a few more years at my parents. Question then: If I want to live in a particular area AND get started with an IP - is a good strategy to just rent where I want to live? As opposed to paying off a mortgage for where I want to live?

Thanks to the other posters for sharing too.

 

[Brady]

Some really good advice there thanks. I'm 23, so could probably do a few more years at my parents. Question then: If I want to live in a particular area AND get started with an IP - is a good strategy to just rent where I want to live? As opposed to paying off a mortgage for where I want to live?

Thanks to the other posters for sharing too.

Was in similar situation last year (was 23).

Unsure to PPOR or IP.

Decided with IP, now have purchase IP#2, looking for IP#3.

Will likely buy IP#4 & #5 will probably be PPOR with partner who would of completed Uni by then and working f/t (hopefully earning some good $$$)

I don't think I would of been able to buy 1 & 2 if I had of purchase PPOR first and definetly would of been able to look to do 3 & 4 as quick.


I still live at home, get along really well with my parents, house is close to my work and house is big enough for me to have my own personal space when needed.



My thoughts are if your happy at home then IP, but of course its always a personal choice when PPOR is involved.

 

[tobe]

You can always change your mind..... Move in, get the grant, decide doing your own washing blows, and move back in with the olds, rent out the property and gear into another IP or PPOR.

 

[Brady]

You can always change your mind..... Move in, get the grant, decide doing your own washing blows, and move back in with the olds, rent out the property and gear into another IP or PPOR.

Make sure that if you are just moving in to capitalise on the grant that you do the sums.

As in that 6-12months that you live there you could be receiving rent and tax benefits.

 

[Ace in the Hole]

PPOR worked for us.

Totally renovated it over time, started a business from home, the house was a mess and a rental would not have worked.
We would not have been in the same financial position we are in now if we bought IP first.

Would do the same again, it's a different feeling owning a PPOR.

 

[fokas]

You can always change your mind..... Move in, get the grant, decide doing your own washing blows, and move back in with the olds, rent out the property and gear into another IP or PPOR.

I thought the grant had ended...?

 

[alexlee]

Question then: If I want to live in a particular area AND get started with an IP - is a good strategy to just rent where I want to live? As opposed to paying off a mortgage for where I want to live?

Yes, rent. Renting (especially if you're young and you want to live in some inner city apartment with a pool and gym) is much cheaper than buying.

'Paying off the mortgage' is an illusion. Even if you pay P&I you're paying very little off the principal in the first 10 years or so. IF you get capital growth, paying off principal, especially the small amount you pay off in the first 10 years, is almost meaningless.

The key point is that 'where you want to live' is going to change. It'll change with your job, with age, your choice of partner, etc. Why buy something that you are emotionally attached to now, and probably pay more than you should, when in a few years the emotional value is going to disppear?

If you have money, you'll never lack for a place you like to live in.

While buying the PPOR first CAN work, the question is whether you can do better by buying IPs first.

 

[azzae89]

Yes, rent. Renting (especially if you're young and you want to live in some inner city apartment with a pool and gym) is much cheaper than buying.

'Paying off the mortgage' is an illusion. Even if you pay P&I you're paying very little off the principal in the first 10 years or so. IF you get capital growth, paying off principal, especially the small amount you pay off in the first 10 years, is almost meaningless.

The key point is that 'where you want to live' is going to change. It'll change with your job, with age, your choice of partner, etc. Why buy something that you are emotionally attached to now, and probably pay more than you should, when in a few years the emotional value is going to disppear?

If you have money, you'll never lack for a place you like to live in.

While buying the PPOR first CAN work, the question is whether you can do better by buying IPs first.

Beautiful. Summed it up very nicely for me there. I think I might ride the "live with my parents" wave for as long as I can, and turn my attention to some well thought out IP's while I'm at it. If I want a lifestyle change in the near future, renting sounds like a good idea.

Thanks so much to everyone for your input.

 

[tobe]

I thought the grant had ended...?

no it hasnt ended. Its changed depending on which state you are in.....

 

[7smurfs]

My situation:

Purchased PPOR mid last year, claimed grant, renovated it, now looking at moving back with the folks and rent out in the next month or so.

Currently looking at IP#2 and a cheaper PPOR for myself.

For me the immediate lifestyle change and experience (freedom) of living by myself/close to work (CBD) outweighed the financial benefit of simply renting it out from the start.

Was also 23yo at the time of purchase.

 

[dreamgirl]

My first property was an IP in Cairns. It was basically more affordable to buy there than in Sydney so I kept renting. I figured the rent that I was paying wasn't dead money as long as I had another property generating income. It worked in my favour coz the banks were more willing to give me loans as the rent bumped up my income.

Now my son has a different scenario... He bought a PPOR, claimed the FHOG and has now moved back home with me and renting his house out. He was going to save up, renovate, then move back into it. But he's decided that the money is better spent on an IP and I couldn't agree more!

It just means that I'm stuck with him for a little while longer! Lol