When you bought your PPOR... no. of IP?

When I bought my PPOR, my stage of investment properties was:

  • 0 IP

    Votes: 69 63.3%

  • 1 IPs

    Votes: 11 10.1%

  • 2 IPs

    Votes: 3 2.8%

  • 3 IPs

    Votes: 4 3.7%

  • 4 IPs

    Votes: 2 1.8%

  • 5 IPs

    Votes: 0 0.0%

  • 6 IPs

    Votes: 1 0.9%

  • > 6 IPS

    Votes: 4 3.7%

  • Don't have PPOR yet

    Votes: 15 13.8%
  • Total voters
    109
  • Poll closed .
lowb

lowb

The debates and information on the pro's and con's of (a) buying a PPOR versus (b) renting and buying more IP's have been discussed, but does this issue relate to how many IPs or how much net assets one has when one is making this decision?

An case... could be this: If I were to have say 3 IPs in Perth that have risen 200% already, I would have quite a bit of equity. Buying a PPOR with high LVR would be easily achievable. I could use the equity in the PPOR to buy more IPs. The converse can also be argued for.

Another thing this relates to is whether it's better to (c) buy a PPOR in a shoddy suburb, upgrade to the next best suburb, and eventually buy where you want to live, or whether it's better to (d) rent first and invest in IP/shares until one has enough equity to buy in the desired suburb.
 
lowb said:
The debates and information on the pro's and con's of (a) buying a PPOR versus (b) renting and buying more IP's have been discussed, but does this issue relate to how many IPs or how much net assets one has when one is making this decision?

An case... could be this: If I were to have say 3 IPs in Perth that have risen 200% already, I would have quite a bit of equity. Buying a PPOR with high LVR would be easily achievable. I could use the equity in the PPOR to buy more IPs. The converse can also be argued for.

Another thing this relates to is whether it's better to (c) buy a PPOR in a shoddy suburb, upgrade to the next best suburb, and eventually buy where you want to live, or whether it's better to (d) rent first and invest in IP/shares until one has enough equity to buy in the desired suburb.
Click to expand...

Hi lowb,

The outcome of this poll will be interesting. I suspect that there really is no correct answer to the question of whether to buy a PPOR first or an IP first. It really depends on each person's individual circumstances, goals and preferences.

I personally bought my PPOR first, paid it off in a very short time (2 years) and then used the equity to buy IP's and establish a share portfolio. The strategy has worked very well in my own situation. Whether I would have been further ahead now if I had have bought IP's first and kept renting, I really don't know. Not having to pay rent has helped me to service a greater number of IP's than I otherwise could.

Regards Jason.
 
Still haven't bought my PPOR yet. It's not so much how many IPs I want as the fact that I'm now at a stage where I want a PPOR even though I know financially it costs me more.

Also, I think the number of IPs isn't as important as it depends on value. I would be interested to know, instead, if members bought their PPOR after IPs, what was the ratio of PPOR to IP? i.e. how expensive was your PPOR relative to the total value of your IPs?

As for buying in the desired suburb..... In theory I could sell everything, borrow another couple hundred k and buy a VERY nice house (even for Sydney). And then I can kiss my early retirement goodbye. There is really no such thing as a 'desired' suburb, since that keeps moving. For me, at least, if I had more money I would upgrade my lifestyle and investments.

I think all you can do is try to push yourself to do the right financial thing and try to hold off those 'nesting' instincts as much as possible. Eventually, you'll succumb, and that's when you buy your PPOR.
Alex
 
No PPOR, we rent, (for $20 per week :) ), and yes we realise we are the most fortunate buggars alive for what we have and where we live and our lifestyle...it's a dream!

We haven't decided where exactly we would like to settle down and live, so no hurry for PPOR...that decision (if at all- meaning settling down in one particular spot), will be years away yet, meanwhile.....buy more IP's.....equity-leverage-buy, equity-leverage-buy.............it's a splendid life.
 
Those few of my friends who know that I invest in IPs usually assume I'll sell my IPs to buy my PPOR with as little debt as possible. They just can't understand why I would take on non-deductible debt for the PPOR while keeping debt on my IPs.

That's why I'm most interested in people buy their PPOR after buying IPs. Do you try to buy as little PPOR as possible? Or just what you're comfortable with? I could, if I sold everything, buy a bigger PPOR than I am in fact planning to buy, but that would just push me WAY back in the wealth building plan.
Alex
 
I bought and sold 2 PPORs before buying IP's....I was a late starter...but wisened up in the end. Ignorance is NOT bliss!
 
Bought (built, actually) our PPOR, then started buying IP's 4 years later. The initial equity in the PPOR opened the door for us.

I don't think it really matters which way you do it, as long as you have some sort of plan.
 
alexlee said:
That's why I'm most interested in people buy their PPOR after buying IPs. Do you try to buy as little PPOR as possible? Or just what you're comfortable with?
Click to expand...

My thoughts are keep the gross asset (and therefore debt) as high as possible as long as you can manage cashflow (using debt to help).

The CG on my first IP pays for the negative cashflow on my PPOR.
 
I bought my first house with intention to move into it as my PPOR, but I rented it out for 1yr before moving in. After owning it for 3yrs it gave me enough equity to start on the IP journey.
 
Interesting topic. I currently have 2 IPs with 2 more being built and have always rented. But I would love a PPOR at some stage, but you need a fair bit of cash for a Sydney PPOR.

However it offers stability which you really cannot put a price on. Personally I see myself building a decent IP portfolio first, then selling a few IPs (Maybe sell to a trust?) to afford a decent PPOR.

There is also the option of buying the PPOR in a trust and renting from the trust. I'm not sure if this is still viable? Ed Chan mentioned it at one of the SIG meetings.
 
alexlee said:
That's why I'm most interested in people buy their PPOR after buying IPs. Do you try to buy as little PPOR as possible? Or just what you're comfortable with? I could, if I sold everything, buy a bigger PPOR than I am in fact planning to buy, but that would just push me WAY back in the wealth building plan.
Alex
Click to expand...

We bought the biggest PPOR possible on the limit of serviceability, at the highest LVR we could get :D

1. worst case, we could sell off other assets
2. we were fairly confident of being able to "recycle" or "launder" the debt from non-deductible to deductible in a reasonable time.

Cheers,

The Y-man
 
We'd paid off our PPOR mortgage before we 'saw the light'. Now we have 8 IPs and a big debt, which is about to get bigger! Wish we had known back then what we now know about equity and had started our investment journey earlier.
Cheers
Shirley
 
Thanks for updating the poll option, those other options didn't come to mind when I first thought of them :)

If buying a PPOR is for personal reasons, then buying a as-cheap-as-possible PPOR wouldn't make sense, as it wouldn't be nice to live in (e.g. 1 bedroom unit in Cabramatta). In my current state of mind, I'm going to hold off buying a place until it is decent enough (I'd settle for a 2 bed house in a suburb close to work+friends+train). Still undecided for sure though!

For those of you with a PPOR, is it easy and profitable to use your equity in your PPOR for IP purchases? If it IS a fairly good strategy, then buying a PPOR would be more attractive (as the financial loss)

Ps: How would you estimate the financial cost of PPOR versus renting?
Net cost of PPOR= More bills + ((Value - Equity) x IR)
Net cost of Renting = Some bills + (Value X yield)
Difference = financial cost?
I wonder roughly what the financial cost is... hm, with renting you don't reap the benefits of capital gain (but you could have used the "deposit" to buy a IP. a bit complicated and difficult!!)

The other thing I can think of with a PPOR is that it's easy to renovate as you live in it (you can do it over a period of time and rennovating a PPOR would be fun), which would increase the value of the property as well.
 
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