March 07, 2022

#143: Property Planning Case Study #1 - What's our next move? Renovate our home and invest, sell the home and upgrade, or upgrade and conver

46 minutes

Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market updates Market conditions changing as more stock comes online With Easter just around the corner, greater stock on the market is giving buyers more choice and the rate of pass-ins continues to shine a spotlight on slightly eased conditions for buyers. The last weekend of February saw the highest number of auctions ever, since CoreLogic first started recording this data. With a number of public holidays drawing near, we can expect the lead up to April to be just as busy. We've seen significant shifts in the market, but you'll have to tune in to next week's episode to get the full picture. Case study - Do we renovate and invest, sell and upgrade, or keep and upgrade! 1. Meet Neil and Amy - the conundrum This case study revolves around clients Neil and Amy (names have been changed), a professional middle-aged couple who live in one of Australia's major capital cities. Their goal is to achieve a good quality standard of living, both now and into the future. Neil and Amy were stuck on deciding their next move. Do they: •Sell the existing home and buy a new home; or •Keep the existing home as an investment and purchase a new home; or •Keep the existing home, undertake renovations, and purchase an investment? 2. Unpacking their goals and financial overview The trio discuss Amy and Neil's lifestyle and investment goals, their financial circumstances, the level of funds they have to play with for their next decision and Dave explains how he navigated them through their money goals and he asked questions such as; what available funds did they want up their sleave after the purchase?, and how much can they save each month with their surplus cash flow? Setting smart 'Money Goals' is a foundational element of effective Property Planning. Money goals are the limit that allows you their clients to rest comfortably at night and these goals are linked heavily to a particular client's appetite for Risk. 3. Getting on the same page - risk profile analysis Neil and Amy both shared a conservative attitude toward risk, however with different approaches on how best to manage their risk. Attitude towards risk is a significant piece of the property strategy puzzle. Inaction or delaying decisions between couples is typically due to the inability of the couple to get on the same page. The trio share how to bridge the divide that holds couples back from making successful decisions. 4. Reviewing the existing home If you are thinking about retaining the current PPOR, there are important questions to ask yourself. If your plan is to turn it into an accidental investment property - have you considered whether the property has investment grade qualities, and are you able to optimise your tax deductions? Or if you think you would be happy living in it for the long-term - are you happy with the location and does the dwelling suit your future needs? Or does it need some work? Being honest about your property is critical to seeing clearly. 5. Modelling the scenarios The trio unpack the pros and cons of the three scenarios that were presented to Neil and Amy for their next decision and each outlines their preferred scenario. Scenario 1 - purchase the long-term home for $1,600,000 and sell the existing home. Scenario 2 - Purchase the long-term home for $1,300,000 using equity in the existing property which is retained as an investment. Scenario 3 - Keep living in t...

...more