Advice please - to sell PPOR or Rent it

Hi all,
Have been reading through this forum and think its great hence why i'm now asking for advice.
Here is the situation:
We currently live in sydney and have a PPOR here. Last October we bought an IP on the sunshine coast as we plan on moving there at the end of the year 2010. A possible job has come up for my husband early then expected and our tenants at the IP are breaking the lease at this point...so what do we do?
If we are taking the job in QLD do we:
1. Sell our PPOR (we bought for $365k now worth about $420k will have about 85k in our pockets) - then move into the IP in QLD(bought for $380k - currently getting $395 week rent) - or keep the IP as an IP and rent somewhere else up there

2. Or do we rent out our current PPOR (think we will get about $410-$420 week rent) and take advantage of the 6 year CGT-free - and do we move into the IP in QLD or do we rent another property in QLD.

Not sure what the best situation financially/tax wise would be to do.

What would others do in this situation, any ideas would be much appreciated.

Cheers

 

I like the idea of taking the equity from our old PPOR and putting it into the new one but in this instance you won't gain much by doing this so I wouldn't sell.

After depreciation and negative gearing you won't be out of pocket by much.

How are prices at the sunshine coast and how's the job market up there?

 

If the market is still buoyant in Sydney, I'd sell your PPOR and either buy another PPOR here on the Sunshine Coast or rent.
The market up here has fallen off a cliff. My IP in Noosa has been on the market for a tenant for 4 weeks and I've only had one viewing despite dropping the price. I know of many houses that have been on the market for two years and can't be sold even below replacement cost.

 

Bill,
House prices are down 10% or more despite what any of the statistics say. You could pick up a nice detached 4 bed 2 bath with DLUG for around $430,000
The job market is dreadful as well, I know, I'm looking.

 

Lorrimer

Thanks for the update.

cheers

 

Lorrimer

Doesn't the above ring alarm bells to you?

In comparison, one of my Sydney IP's became vacant the other day, and a couple paid more than asking rent so that we take it off the market.

Overall I had 3 days vacancy and only because I couldn't fix some things fast enough.

I know it's not the same everywhere in Sydney but considering the selling and buying costs I wouldn't sell and IP which costs very little to hold unless I had to.

 

Billv. Yeah I'm thinking not selling even though i'm sure I wouldn't have any trouble selling it. But I reckon that the syd market will keep going up....fingers crossed.
We thought we did alright when we purchased this property on the sunshine coast for $380 2 years old...3 bed,2 bath, DLUG. Small spa/pool.The property had actually been on the market for 9 months...when we came along the owners were desperate to sell so got a good price for it (we think). my husband is lucky I guess in the job market because of his proffession and we know a few people up there. So I guess the question is would we be better off renting or living in the IP. Because the sydney property would still be classified as the PPOR...does that mean you can' t claim any expenses on the property if you were renting it out (like you would for an IP).

Lorrimer
Will be interesting to see how our real estate goes at re-leasing out our IP since you have been trouble renting yours out. Our property is down at Meridan Plains. Our only dilema if we were to sell down here is whether or not we would get another loan to purchase something else as I'm currently not working because we've just had our first child and because my husband would of only just started a new job. So could be a problem in getting the loan. Would have to re-look into that. Any ideas when you think the market might turn around on the Sunshine Coast...maybe we might sell syd prop in a year or two and then re-buy up on SC.

 

I would approach it in two ways, one emotional, the other financial.

Do you need to live in your own PPOR or will you be comfortable renting? This answers guides the next.

What makes sense based on numbers? As a general view, I would consider converting your existing PPOR into an IP, you have the 6 year CGT rule available, and move into a rented property. It is nearly always cheaper to rent than own and pay off a mortgage. Some mining towns it's not but in capital cities, it normally is.

It seems as the rent yields you will get are good, add in the benefit of depreciation and tax, what do the numbers suggest to you?
It also gives you time to reassess each market.
Good luck
Greg

 

definitely agree with GregR