Looking forward

A true story with fake names for personal reasons.

In about 2002 Jack (aged 28) had $18,000 and was concerned about spending this money overseas on a long awaited trip.  I commented "it is good to go overseas but it is tough to come back broke after a few years".  So he sort of reluctantly agreed to take my advice and purchased this new unit on the outskirts of Sydney and rented it out with just enough rent to cover his repayments.  In 2006 after Jack returned from overseas he and his partner Jane decided to buy a home in Sydney (Jack only had the unit and Jane did not buy any property before she went travelling – never even thought about it), so Jack put his unit on the market (really they should have lived out there in the unit until they had saved a bit more cash; plus it would have lessened the capital gains bill when the unit was sold for a profit).  Jack sold the unit, made a $120k profit, and that went towards buying a house 20 mins by train from Sydney central (by the way Jane had a well-paid job at this point).  In 2008 they decided to have kids and that is when the pressure of the mortgage started to show.

By the time 2010 came around and there was an addition to the family Jack was tired of the mortgage dominating their lives and they made the decision to relocate two hours out of Sydney in a tourist area.  The Sydney house was sold with Jack making a $350k profit (so he rubs his hands together and goes shopping for a mortgage free house).

NB.- The thing to note is that there was a time frame of several years in between buying and selling houses, and that is an important part of changing plans, not to sell at the wrong time and lose out on the capital growth.  The side benefits of being out of Sydney is the children are growing up in a better environment for raising kids.