Real Estate Advice Wanted - Investment Property and PPOR

Lwoody007 on 19/08/2019 - 07:41
Last edited 19/08/2019 - 10:07 by 1 other user

Hi all,

I'm writing this today to seek advice to make a decision on my real estate query.

I've got 1 property I live in which was built new I owe roughly $500k on it and could sell it for $800k to $850k. I've got an invesment property that i bought as my first house which was sold to me at 450k but now the market in this area is flooded with new homes, could only really sell it for $395k to $415k if i'm lucky, owing currently approx $295k.

My idea was to sell the house I'm in and use the profit to pay off my first home which was bought for $450k but i only owe around $295k. I would relocate here and give up my mining job and either study or find something i enjoy more cause mining isn't my cup of tea anymore.

I've got myself a small family and I've only just turned 30. I've got no other debt and we paid out the car, My wife works and we have 2 small children, ones at daycare and the other one is new.

Reasoning why this is my consideration:
- Debt does bother me, I hate the feeling of being bound to a job to pay off debt. I like feeling free to leave anytime I desire or if shit hits the roof. Considering if my debt was gone it may help me handle being at the mines,I don't know.
- Opens up pathways to studying something and working less or choosing jobs and hours.
- Spending more time with my family since they're so young, this would entail helping my wife out aswell, she is time poor with her sole trading job.

Thanks

• 

  Quantumcat on 19/08/2019 - 07:51

  +1

  Sounds like a great plan! What's the dilemma? Usually there's another option in a dilemma.

  • 

    woody007 on 19/08/2019 - 07:55

    Hi,

    Changed the name but it's either do that or keep doing what we are doing.

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  87percent on 19/08/2019 - 07:54

  +4

  Think you need to lock down the "study something" or work option first.

  • 

    woody007 on 19/08/2019 - 07:55

    TBH no idea what i want to study thats the hardest part. I could continue to work but aslong as the debt factor has faded out of my mind, don't know until i try it i guess.

    • 

      87percent on 19/08/2019 - 10:33

      just for context, i have a PPOR and an IP, and the MRS went back to school to become a teacher nearly 3 years ago. Even though I make decent money, single income can be very difficult. All it takes is a few bills here, and a few bills there, before you start to worry about money. For me, the insurances (2 cars, home & contents, landlord) and registration (on both cars) ALL seem to come at the start of September, so I'm not looking forward to that!

      Unless you have a definite plan to go back to school and do whatever, prepare to financially slog it out for a while but if she's working a sole trader job, i would re-think your plan

      • 

        woody007 on 19/08/2019 - 11:43

        This is a good angel to look at when you put it like this. But without a mortgage it could be done without these stresses, No i don't have a definite plan, just brainstorming ideas for years.

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  Skramit on 19/08/2019 - 08:17

  +2

  Surely keeping the investment property is worth it for the tax deduction at the moment. Sounds a bit like you're panicking about current prices but property is a long term game. You need to be in it for the long haul.

  Also once you sell the house you're in, are you going to rent or buy again? You need somewhere to live. You'd be buying and selling in the same market so your profit from sale kinda get's neutralised if you buy another house to live in.

  I don't see much of a financial advantage in selling up now to cash in on your capital gain.

  • 

    dogboy on 19/08/2019 - 09:09

    Pretty tough to get a tax deduction on a house you don't owe much on. Would no doubt be positively geared. My investment property costs me ~$7k per year with no tax deduction just in rates and insurance.

    • 

      Skramit on 19/08/2019 - 09:23

      Fair call. OP didn't specify positive geared or not in OP.

      • 

        woody007 on 19/08/2019 - 11:41

        Yeah sorry my bad Skramit. Yeah it costs me about that with insurance, rates and some maintenance costs if required.

        • 

          Skramit on 19/08/2019 - 12:36

          +1

          @woody007: Even with positive gearing, you're still offsetting your rental income with the interest paid to the bank, so it's still beneficial. You're just paying tax on the net profit. So it's still a decent strategy to build wealth.

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  Typical16-bitEnjoyer on 19/08/2019 - 08:49

  This is not financial advice.

  If you're combined income is over $180k, it is very beneficial to keep the investment property and keep the mortgage on it.

  Guessing you're in WA? If you can afford it, just ride it out. You're not in a negative equity position like a lot of others are facing.

  • 

    woody007 on 19/08/2019 - 09:03

    The problem is the investment is postively geared any deduction is mynute to offset my taxable income.

    I'm QLD, can afford it its just feels like a stagnent.

    Consider what you're saying here though.

    • 

      Typical16-bitEnjoyer on 19/08/2019 - 10:30

      The problem is the investment is postively geared

      It doesn't have to remain that way :)

      • 

        woody007 on 19/08/2019 - 10:31

        Enlighten me? :)

        • 

          Typical16-bitEnjoyer on 19/08/2019 - 10:36

          +1

          @woody007: Obtain proper financial advice :)

    • 

      tsunamisurfer on 19/08/2019 - 11:05

      +3

      Positively geared investments are not a problem.

      I don't want to lose $1 just to claim 47c back.

      • 

        Mike88 on 19/08/2019 - 12:29

        Making money is bad apparently.

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  elgrande on 19/08/2019 - 09:14

  Is it really about the properties, or are you feeling like a change in life?

  • 

    Skramit on 19/08/2019 - 09:20

    Could become a bikie….

    • 

      woody007 on 19/08/2019 - 09:23

      OZbargain forever, forever OZbargain.

  • 

    woody007 on 19/08/2019 - 09:22

    I'm leaning more to the life change part mate.

    • 

      elgrande on 19/08/2019 - 12:05

      Its good to have a change from time to time. My only advice is to:

      A) have a bit more of an idea of what job or study you would like to take on

      B) make sure the mrs is 100% happy at the other property, as could cause issues if not.

      C) refer to B

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  nansnake on 19/08/2019 - 09:46

  Off topic question here. How do you get a job in mining? I wouldn't mind spending some years working hard to attain financial stability.

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    woody007 on 19/08/2019 - 09:50

    +1

    For me i did a apprenticeship and to be honest i didn't want to stay there as long as i did. Wanted the paper and that was it, bit of cash and then happy. Mining is more who you know not what you know. Could channel in by contracting then working your way into a full time role but you might need to do this for awhile to get your skills up and attain some contacts.

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  The tiger on 20/08/2019 - 11:02

  Hi, Woody007, I am a retired ( senior) financial consultant and had been in realestate and share equity management for years, plus I have my three sons in laws who are almost in your situation, but now they settle down well, unlike you.In your case I would suggest the followings ( not in priority sequence):
  1) I see no reason you should sell your present house and move to your investment property ; remain where you are presently;
  2) get rid of that feeling of stress owing others such as bank for your mortgage. If they don’t chase you and if you able to afford the regular payments , why bother about it as interest is so low now. The value of money is deprecating for ever while brick and mortar is appreciating all the time;
  3). Yes family gathering is important especially you have your young kids and young wife too. Solution: in my sons in laws’ case they have to fly in fly out to solve this problem. It works them well. They have made up their mind after they attain their financial stability they would have a new life by settling down fully - this may take them not less than 5 years to 8 years, but meantime they have the times spent with their family members.
  4) Forget the idea of going back to school again. It is wasting your time and money since you are already 30. The papers you got subsequently donot guarantee a job for you that you want , unless you attain a TAFE course such as plumbing course.
  5) If really you miss your family which I assume so , go to find a job if possible at your home place for not matter what job it is and no matter what the pay is.
  6) Stick to your present job , but take unpaid leave to visit your family from to time no matter what the travelling cost to you provided that you are happy ( being able with your family ). Do this way until one day you got fed up and hopefully by that time you have already achieved financial independence and you are a more matured person,
  Personally I was almost like you but at a more mature age of 48 when I was on the cross road as yours, and my sons in laws presently are. Of course they are taking my advice.

  • 

    woody007 on 22/09/2019 - 10:34

    Hi Tiger,

    To give you some feedback I've found things to help push through. I'm now going to gym and going to take more time off to try combat the feeling of being away from home all the time. I've relaxed my budget a bit but will get to my financial goals in a reasonably good time. Thanks for the write up it helped alot and i've read over it 100 times.

    Thanks again for contributing and giving me the courage to continue on the right direction.

    Woody007.