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Hello and request for Property advise

Discussion in 'Introductions' started by Harlie, 30th Mar, 2015.

  1. Harlie

    Harlie New Member

    30th Mar, 2015
    Hi there,

    I am currently looking for advise in relation to the below points, if anyone could provide any insight it would be really appreciated.

    Currently have home in Mt Lawley WA, valued at $950k with $200k mortgage.
    Planning a move to Melbourne in next 6 months.
    Average annual income between partner and I is $250k
    Partner has a lump sum of $170k
    Currently both of us do not have and property investments or other investment to offset out tax.

    Looking for advise on best way to go over the next 12 months to 2 years, should we

    Rent out Mt Lawley house and use these funds to pay off loan (currently not interest only) approx $700 per week rental.
    Look at renting a property in Melbourne short term as buying a property to the same quality of Perth would be expensive
    Get into a separate lower priced investment property somewhere else in Australia/Melbourne to ensure we are still moving forward if we do rent a principal residence in Melbourne (probably inner suburbs Collingwood etc.)

    Our choices on areas to live in Melbourne are Northern inner city (Collingwood, Abbortsford, or out in the Dandenongs)

    Any advise as to what people's thoughts are or anyone you would recommend talking to in the Melbourne area would be appreciated.


  2. Terryw

    Terryw Well-Known Member

    9th Jun, 2006
    Its just a matter of sitting down and crunching some numbers.

    Would probably not be a good idea to pay off the loan early if you are going to rent the property. Better change it to IO asap.
  3. GregR

    GregR Reid Consultants

    13th Jul, 2009
    Berwick Vic
    It is generally cheaper to rent in Melbourne than to buy but it does depend on where. However rent is a lost cost unless you have better use of funds.
    You are in a good position where you have choice, rent or buy. It will be a decision that is based on emotional need to live in your own house compared to renting and what the financial benefits are.

    If you decide to buy and it appears you have the ability to do so based on your existing lump sum, your equity on your existing home and your borrowing capacity, it will be working out what is the most tax effective option. The two main choices are:
    1. You could sell your existing PPOR and free up perhaps all you will need to buy a new PPOR in Melbourne. You then get finance on this and use that to buy one or more IP's using 105% debt.
    2. You keep your WA home, convert to an IP and rent a place to live in Melbourne, however the WA IP will probably be positively geared adding to your tax impost. You could refinance your PPOR in WA, set up a separate loan facility and use those funds to buy a second IP that could be negatively geared (depending on where and price).

    There are a number of other options or variations to these and it will depend on what you end goals are.

    I suggest you do some numbers on the options (or get someone to do them for you), then you can make an informed decision based on the financial aspect and balance that with the emotional component.

    Good luck with the move. Also consider where you will be working, if it is in the city, travel time from the Dandenongs is significant.