Maximising capital gains
Question from Renee updated on 9th October 2017:
We own a two bedroom unit in Auckland which we are living in. We purchased it in 2014 for $460,000 and then renovated it in late 2016. It is now valued at $700,000. We are wanting to maximise our capital gain as much as possible.
Do you recommend we use our equity to buy a rental and remain living in the unit or are we best to sell, find another do up, renovate and then sell it on? Ideally, we would like to move into a bigger house. However, from a property investment perspective, we want to make the most of the capital gains.
Our expert Kris Pedersen responded:
You don't say what your mortgage level is. That is required to get an idea on roughly how much equity you are likely to have to play with. If the property is okay I wouldn't recommend selling as you are going backwards with the sales costs.
If topping it up to 80% releases enough equity to be able to purchase something with either a 40% deposit (through a main bank) or 30% (through a non-bank funder) then you can stay as is. Resimac would potentially go to 80% on this property and a rental. However, I wouldn’t recommend this as I am not a fan of having a personal residence cross secured into rental properties.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz
