What would you do - move, sell, rent, etc?

[wobbycarly]

Turns out that the better half has just found out that we are not in the zone for the high school she wishes to send our children to. (Just a couple of blocks away - typical!!) Apparently, the school also rejected something like 80 out-of-area applications this year, so the chances of getting in are slim.

So whilst we have a bit of time - our eldest is only just going into grade 3 - we've started talking (well, I listen) about how we get around this.

I see a few options:
- sell our PPOR and buy in the zone
- sell our PPOR and rent in the zone*
- keep our PPOR, convert to IP and rent in the zone*
- keep our PPOR, convert to IP and buy in the zone

*Neither of these are serious options according to 'the boss'

My challenge is that I don't think we can afford option 3 (and maybe not option 1) without some "creative accounting".

We have equity locked in our PPOR because we've been paying P&I (didn't really know about IO/offset at the time, although we do have an offset on the loan)

So what does the brains trust think of the following scenarios:

1. Sell PPOR and buy again
   - Agents fees on the way out impact on net received, but CGT-free status is appealing
   - Would result in increase in non-ded debt by approx $100-$150k
   - May need sell an IP (approx $140k equity) to pay down non-ded debt, but would be hit with additional agents fees, plus CGT**
2. Keep PPOR as IP, buy again
   - Buy new place, using cash/equity for deposit. (Maybe this time use the IO/offset option - bank permitting!!)
   - Convert PPOR loan to IO and rent it out. Would result in approx $400pm CF+
   - Take out LOC against equity in PPOR and use this to fund (capitalise) interest. The $400pm goes into the offset on the new PPOR - debt recycling
   - Hold onto Brisbane IP

**It's in Brisbane, so may be a soft market right now. Happy to let this one go if necessary - it's done it's job - but obviously also happy to hold. I also need to verify the securitisation of this property to make sure that we get what we expect if we do sell... friggin' x-coll!

I know this is our decision, and it's largely a lifestyle choice, so hugely subjective. BUT, without either a) selling an IP to reduce the non-ded debt, or b) using some sort of debt recycling technique, I'm not sure we can afford it.

So, I'd like to hear what others would do/have done in a similar situation. Haven't spoken to our broker OR accountant yet, and certainly will do so in due course, but I welcome the input from the creative minds available here! *sucks up*

 

[kathryn d]

You sound like you are a few years away from your child going to that school.
Circumstances may change and you wife may change her views. I would suggest not doing anything at the moment.

If the opportunity comes up to buy a property in that area, go for it, if it fits into you criteria. At that time you can decide to use as an IP or keep as a PPOR. Then rent out your currrent as an IP.

I don't like selling unless necessary.

 

[sash]

Why not rent your PPOR and rent a house within in the school zone.

In another year or so once you are settled you might be able to move back your home. Ask they if that is okay.

Temporarily inconvenient but maybe the better option if it is feasile.

 

[Gordon Farkus]

The school's reputation could easily change within the period until 2015 when your child is to start there. You even might end up in the right zone if the the other school improves... Or you might win Tatts, and Grammar or College (you're in Geelong?) are in the frame....

So, while obviously good to consider the options, but I'd be doing nothing for the moment.

If none of the above eventuate I'm with Kath D (but not in a consumatory sense) - scenario 2: keep the PPOR as an IP and buy in the zone.

 

[wylie]

I'm confused by your Geelong tag if the school and PPOR are in Brisbane???

Anyway, the family next to one of our IPs (one street outside the catchment boundary) rented their place out and rented a house in the catchment area of the school that I couldn't wait to get away from

Schools and reputations can (and DO) change with principles and teachers and with several years to go, I would wait until part way though the year before the move to make the decision (and the move).

I know two families who both rented near Brisbane State High School to get subsequent siblings in and one family moved back a year later once the child was in. They had to prove they had moved and a lease was not enough. They also needed utilities bills as proof so had to move with enough time to have those bills issued, mid year before the new school year started.

 

[Gordon Farkus]

I'm confused by your Geelong tag if the school and PPOR are in Brisbane???

Rob's ID states he's in Geelong. So assumed he lives there, no mention in initial post that PPOR and IP are both in Brisbane, just IP...

 

[wobbycarly]

Rob's ID states he's in Geelong. So assumed he lives there, no mention in initial post that PPOR and IP are both in Brisbane, just IP...

That's correct. PPOR is in Geelong (as is school) and IP on the potential chopping block is Brisbane.

I agree with everyone that waiting is the way to go. Can I get you to speak to 'the boss' that 3-4 years before high school doesn't mean that we have to move in the next few weeks?!?

 

[jaycee]

That's correct. PPOR is in Geelong (as is school) and IP on the potential chopping block is Brisbane.

I agree with everyone that waiting is the way to go. Can I get you to speak to 'the boss' that 3-4 years before high school doesn't mean that we have to move in the next few weeks?!?

Yeah I'd love to... if I was the STUPIDEST man on earth

 

[murph14]

Maybe send them to a normal high school? Where they won't get an inflated sense of self importance? Not trying to be rude but yeah.. I lasted 2 years at a posh private school. Couldn't stand it

Hmm I probably have no right to be saying this

 

[wobbycarly]

Maybe send them to a normal high school? Where they won't get an inflated sense of self importance? Not trying to be rude but yeah.. I lasted 2 years at a posh private school. Couldn't stand it

Hmm I probably have no right to be saying this

We're simply talking about a public high school with a good reputation. Compared to the other options of very low standard public high schools.

 

[murph14]

We're simply talking about a public high school with a good reputation. Compared to the other options of very low standard public high schools.

Guess I'm too quick to judge.

 

[Ms Jade]

I'm surprised at all the "wait and see" responses. If the select high school is that much better and that is really where they want to go I'm not sure how waiting will help. I don't know the Geelong market so not sure how buoyant it is. However, my sister recently took advantage of the lull in the market to buy in the Balwyn High School zone. Her kids are no older than yours. But the 200k difference to get into the zone now may well be a lot more in years to come. It seems to have gotten worse rather than better to get into these schools IMO.
There may be an opportunity to start looking for a 'bargain' house in the school zone.
I vote for the turn PPOR into IP with debt recycling option if possible. If you have to sell, which is the better long term investment - the current PPOR or the Brisbane IP? I am not averse to taking a profit on an IP to pay down PPOR debt.

 

[skater]

Why not wait, like some of the others have suggested. In the meantime, prepare. Convert your PPOR to IO and put all spare income into the offset. Doing this will give you more choices if/when you decide to move.

Personally, if it were me AND I really liked my PPOR and didn't want to move permanently I would wait and rent something in the catchment area close to enrollment time. Give it 6 months (the time of the lease), then move back again. Once the child is enrolled and attending classes I don't believe they can really do anything about it.

 

[w0nnie]

+1 for waiting, 2015 is too far away and who knows what will happen with yourself, the school or the catchment policy, hey your child might even excel academically and get offered a scholorship somewhere.

if it were now 2014 id vote for renting out your current PPOR and renting within the catchment, makes it easier to swap back if things are not as rosy as they appear from the outside looking in.

 

[The Y-man]

Is there a caravan park in the zone by any chance?

The Y-man

 

[Graemsay]

How many out-of-area applicants did the school take? If it was 20 then moving would make sense, but if it's 420 then maybe less so.

Is there any particular reason for holding a property in Brisbane? I've heard of tax advantages and exposure to different markets. But it is nearly 1800 km away, and I suspect that would make it harder to manage. I'd be inclined to sell it once the situation has returned to some degree of normalcy in Queensland.

As for the new house, could you pick up a renovation or building project? You've got the time to fix something up, and you might even make a profit in doing so.

 

[wobbycarly]

Yeah I'd love to... if I was the STUPIDEST man on earth

And you're not?

Is there a caravan park in the zone by any chance?

The Y-man

Not sure that would be seen as an upgrade.

How many out-of-area applicants did the school take? If it was 20 then moving would make sense, but if it's 420 then maybe less so.

Don't know if they took any. Only been told they rejected a fair few.

Is there any particular reason for holding a property in Brisbane? I've heard of tax advantages and exposure to different markets. But it is nearly 1800 km away, and I suspect that would make it harder to manage. I'd be inclined to sell it once the situation has returned to some degree of normalcy in Queensland.

Managing is not an issue as it has an on-site manager. It gives us an excuse for a deductible trip. At the time we purchased, BNE was very much cheaper than an equivalent place in MEL.

As for the new house, could you pick up a renovation or building project? You've got the time to fix something up, and you might even make a profit in doing so.

You can take a ticket behind jaycee to talk to 'the boss' about this.

While we ARE both on the same page (albeit different sides of that page at times) she is also looking at this 'opportunity' to upgrade to a bigger/nicer/newer, etc, place. So although we don't really need to act for a few years, she can see the bright and shineys and is getting excited. I'd be happy for a reno project.

As I mentioned in my first post, I realise there is a lifestyle choice component to whatever decision we make. I guess I wanted confirmation that the options I'd come up with were "sensible." This has been good - thanks.

 

[Graemsay]

You can take a ticket behind jaycee to talk to 'the boss' about this.

And people wonder why I'm not married...

 

[Postcard]

Hiya,

I wouldnt put my childrens schooling and financial decisions in the same basket. To me they are totally different things.

The more time you put into your children the less money you have to spend in compensating. That works over a broad range of child rearing and not just there education.

Hmmm, Is that true. Wealthy person spends max time in constructive way, with their child VS Poor person, always working, never home, always negative interaction. Chance of success for child- well comes down to childs build/ ie personality.

The older I get the less I know.

 

[JASA]

what's behind all this?

I used a friends address to get my children into the school I preferred. Some schools do demand proof of residence others don't. There are many ways around this, it just requires creative thinking. I think moving house is like using an atom bomb to kill a fly. Is this the only reason your wife wants to buy property in another area? Maybe the real motive is the bright new shiny stuff you mentioned above. IMO Men tend not to listen well because they consider we (women) talk too much. It may not just be about the school. Put on your listening ears and find out what she really wants.