I've never rented out here, although I do have a property that would make a brilliant IP.
I've only ever rented in Adelaide.
I've only ever rented in Adelaide.
Buying vs Renting??
- Thread starter chook77
- Start date
Thanks for the enouragement Troyhunt. My husband and I have been frustrated at our PM because we have been without an airconditioner for the last 3 mths, the hottest of the year in Far Nth QLD.
Having said that we have been weighing up the emotional side of renting with that of owning our own home and we are coming to the conclusion that if we do want to get ahead, we could put up with the occasional inconvenience of renting. So it is good to hear that you have done that. Have you ever bought a PPOR??
Having said that we have been weighing up the emotional side of renting with that of owning our own home and we are coming to the conclusion that if we do want to get ahead, we could put up with the occasional inconvenience of renting. So it is good to hear that you have done that. Have you ever bought a PPOR??
No, because first and foremost the numbers don't stack up for us. Again, these parameters will differ for other people but in our situation we rent in a "blue chip" suburb which tends to have lower yields (makes renting proportionally less than buying) and we invest in areas with higher yield and CG potential than what our home is located in. It also helps we live in a great place with a good landlord but it hasn't always been that way in previous properties.
Beyond this, there are all the old financial arguments of having to pay for your own repairs, water, rates, strata fees etc and not getting the benefits of depreciation, tax deductibility and objectively choosing high growth areas (as opposed to subjectively saying "where do I want to live") to invest in when you go down the owner occupier path.
If I may make a suggestion in your scenario; I'm not sure from your post if you don't have an aircon or if you do and it's just broken. Assuming the former, I would perhaps offer the PM a small increase or find another way of sweetening the deal to make it work. If it's just broken and they're not fixing it, I would be getting pretty hardnosed about it and giving them 7 days to resolve before I get my own tradesman and deduct it from the next rent payment. If they don't like it, you can all discuss it cordially at the Residential Tenancies Tribunal. I've had a similar problem in a previous place I rented and this approach made things happen quite quickly.
Thanks for the tip, Troyhunt. Yeah we have an air conditioner and it's broken. So I should probably give them a notice to remedy breach, I think we have been a bit too patient.
Thanks for the insight into your situation. We want to live in a certain area of Cairns, when we move mid year, and it is not good for CG, which is what we're after. So we would be better to rent there and buy an IP in a better CG area.
Thanks for the insight into your situation. We want to live in a certain area of Cairns, when we move mid year, and it is not good for CG, which is what we're after. So we would be better to rent there and buy an IP in a better CG area.
Can someone plz have a look at my personal situation:
I bought a PPOR mid 2008, I live in it and rent out two bedrooms.
My weekly mortgage payments are $500 and I get $220 in rent from two people renting.
I want to buy a second house (first IP)... but how can I achieve this (sooner?) if I was to take into account renting perhaps somewhere else and totally putting my house on the market?
I mean I think I could rent my house for around $300 MAYBE $350 totally, this means moving out myself and paying rent elsewhere OR I could also rent out the upstairs part for $120 or so which would take my weekly rental income to $340 and I would still be living in my PPOR which also means that if 3 people are now renting, my mortgage weekly payment would now be $160.
Can someone assess my situation and offer any useful advice?
Should I keep taking in my rental income and living in my PPOR or move out and rent elsewhere while renting my PPOR now an IP.
I bought a PPOR mid 2008, I live in it and rent out two bedrooms.
My weekly mortgage payments are $500 and I get $220 in rent from two people renting.
I want to buy a second house (first IP)... but how can I achieve this (sooner?) if I was to take into account renting perhaps somewhere else and totally putting my house on the market?
I mean I think I could rent my house for around $300 MAYBE $350 totally, this means moving out myself and paying rent elsewhere OR I could also rent out the upstairs part for $120 or so which would take my weekly rental income to $340 and I would still be living in my PPOR which also means that if 3 people are now renting, my mortgage weekly payment would now be $160.
Can someone assess my situation and offer any useful advice?
Should I keep taking in my rental income and living in my PPOR or move out and rent elsewhere while renting my PPOR now an IP.
Invest - the only thing i can suggest is this:
- get a rental appraisal from a local real estate agent
- look at what it will cost to rent another place
- look at the costs living in your house now vs renting elsewhere and costs of shortfall on your current house if it were rented out.
Once you do the comparison, you will be able to see if it's worth staying, or renting elsewhere. I would tend to think that if you are happy in your house now, and you have two people renting rooms off you.... you are in a good position to stay in your home and buy an IP.
The only better option would be if you rented a place similar to yours for $350/wk, and took the other two people with you and still charged them $220/wk like you do now.
This would make your weekly outgoings $130/wk ($250-220), vs the $280/wk you are currently forking out to cover your mortgage ($500-220).
Alternatively - you could move out and live by yourself in a cheaper property, say $300/wk. This is $20/wk more than what you are forking out now... BUT, you are living by yourself!!
The decision really comes down to what YOU want to do.
Ask yourself
- are you happy to keep sharing with other people?
- do you want to live by yourself?
- what price do you place on your personal space?
I wish my landlord was like you! Ours treats us like useless no-hopers, as if we are total scum not worth any effort or investment.
Needless to say we are leaving at the end of the lease. We've had enough of being treated as 2nd class citizens.
- get a rental appraisal from a local real estate agent
- look at what it will cost to rent another place
- look at the costs living in your house now vs renting elsewhere and costs of shortfall on your current house if it were rented out.
Once you do the comparison, you will be able to see if it's worth staying, or renting elsewhere. I would tend to think that if you are happy in your house now, and you have two people renting rooms off you.... you are in a good position to stay in your home and buy an IP.
The only better option would be if you rented a place similar to yours for $350/wk, and took the other two people with you and still charged them $220/wk like you do now.
This would make your weekly outgoings $130/wk ($250-220), vs the $280/wk you are currently forking out to cover your mortgage ($500-220).
Alternatively - you could move out and live by yourself in a cheaper property, say $300/wk. This is $20/wk more than what you are forking out now... BUT, you are living by yourself!!
The decision really comes down to what YOU want to do.
Ask yourself
- are you happy to keep sharing with other people?
- do you want to live by yourself?
- what price do you place on your personal space?
wylie said:
I wish my landlord was like you! Ours treats us like useless no-hopers, as if we are total scum not worth any effort or investment.
Needless to say we are leaving at the end of the lease. We've had enough of being treated as 2nd class citizens.
Care to elaborate?
Long story, and kinda over it now sorry. Hence why im moving soon. Probably more of a vent and whinge rather than anything.
I've been going out of my way to be a really good tennant so that when the day comes to make a request, it will be met more favourably....
... but when i made 2 requests (cats and aircon), despite offering more rent in both cases, i was met with flat refusal.
To me, my tennants are valuable. If i look after them, they look after my investment.
If i treat them like p00, i would expect my property to be treated equally.
My landlord (whom i have met), acts like we are a hinderance or a burden on his property (which we certainly are not), and not the income helping to support his investment.
Bottom line is that as a landlord you're running a business. It sounds like the guy made a poor business decision in not investing in his property and tenants and will likely pay the price. It also seems like there is a bit of an attitude problem which is never helpful.
Having said that, I've refused similar requests before because it didn't make financial sense holistically which includes potential increases to rent or if it lead to a period of vacancy.
Having said that, I've refused similar requests before because it didn't make financial sense holistically which includes potential increases to rent or if it lead to a period of vacancy.
If I rent my PPOR out as an IP, do I still have to pay the council rates, higher water bills and other fees associated with PPOR?
If I rent out my home for $300 pw and then rent a house with my two
tenants for $350 I have to pay the following:
Liabilities:
Mortgage $500 pw.
Rent $117 pw.
Total = $617 pw plus council rates and other PPOR fees
Cash flow:
Rent from IP $300 pw
So if I rent out my PPOR and then rent elsewhere, it will cost me around $317 pw.
If I stay put in my PPOR, renting two bedrooms, it will cost me $290 pw.
Not much of a price difference unless I no longer have to pay council rates and all that crap but I still think I do??
yeah you still have to pay your rates and other bills..
.... hmm, looks like i rushed through that post above. Didnt do the numbers properly sorry.
Let try again
Option 1: Stay as you are now, living in your PPOR
Outgoings:
- $500 mortage
Incoming:
- $220 rent from your housemates
# Net position: $280/wk outgoing
Option 2: Convert your PPOR to an IP, rent elsewhere
Outgoings:
- $500 mortgage
- $300 rent
Incomings:
- $300 rent from your IP
- $220 rent from your housemates
# Net position: $280/wk outgoing
However - you will be better off with Option 2 due to the negative gearing benefits.
The other variables in this situation are that you might be able to rent a better place than yours or in a better area for just a little bit more than $300/wk.
It depends on if you want to live in a better area or a better house i guess, or if you want to downgrade to something smaller.
If you are happy where you are in your house - stay there! You've got two people helping to pay your mortgage, so its working pretty well for you by the sounds of it.
the only problem with that is if you start to get sick of sharing your house with other people - but only you know that!
Sorry for mucking up the numbers before!
.... hmm, looks like i rushed through that post above. Didnt do the numbers properly sorry.
Let try again
Option 1: Stay as you are now, living in your PPOR
Outgoings:
- $500 mortage
Incoming:
- $220 rent from your housemates
# Net position: $280/wk outgoing
Option 2: Convert your PPOR to an IP, rent elsewhere
Outgoings:
- $500 mortgage
- $300 rent
Incomings:
- $300 rent from your IP
- $220 rent from your housemates
# Net position: $280/wk outgoing
However - you will be better off with Option 2 due to the negative gearing benefits.
The other variables in this situation are that you might be able to rent a better place than yours or in a better area for just a little bit more than $300/wk.
It depends on if you want to live in a better area or a better house i guess, or if you want to downgrade to something smaller.
If you are happy where you are in your house - stay there! You've got two people helping to pay your mortgage, so its working pretty well for you by the sounds of it.
the only problem with that is if you start to get sick of sharing your house with other people - but only you know that!
Sorry for mucking up the numbers before!
yeah you still have to pay your rates and other bills..
.... hmm, looks like i rushed through that post above. Didnt do the numbers properly sorry.
Let try again
Option 1: Stay as you are now, living in your PPOR
Outgoings:
- $500 mortage
Incoming:
- $220 rent from your housemates
# Net position: $280/wk outgoing
Option 2: Convert your PPOR to an IP, rent elsewhere
Outgoings:
- $500 mortgage
- $300 rent
Incomings:
- $300 rent from your IP
- $220 rent from your housemates
# Net position: $280/wk outgoing
However - you will be better off with Option 2 due to the negative gearing benefits.
The other variables in this situation are that you might be able to rent a better place than yours or in a better area for just a little bit more than $300/wk.
It depends on if you want to live in a better area or a better house i guess, or if you want to downgrade to something smaller.
If you are happy where you are in your house - stay there! You've got two people helping to pay your mortgage, so its working pretty well for you by the sounds of it.
the only problem with that is if you start to get sick of sharing your house with other people - but only you know that!
Sorry for mucking up the numbers before!
Thanks for running the numbers for me!
I think I will stay put and ride it out. I dont mind sharing my house. Plus if I really need more money I can rent out the upstairs room for 140 easy IMO. So that would mean that my house would only cost me 140
Thanks for running the numbers for me!
I think I will stay put and ride it out. I dont mind sharing my house. Plus if I really need more money I can rent out the upstairs room for 140 easy IMO. So that would mean that my house would only cost me 140
Now your thinking
Sounds like you've got it all very well under control.
If possible i would be saving the rent money from your housemates, or using it to pay down your mortgage above the minimum $500/wk. This will help you build up equity a lot faster to leapfrog into your next property.
Now your thinking
Sounds like you've got it all very well under control.
If possible i would be saving the rent money from your housemates, or using it to pay down your mortgage above the minimum $500/wk. This will help you build up equity a lot faster to leapfrog into your next property.
Thanks a lot for your comments
Awesome advice.At the moment I have 10 grand getting interest which is my insurance money just incase I lose my job but it is also my future IP money.
I am trying to save up 2 grand now on the side to put towards my mortgage as extra. Im stuck with my fixed 8.49% mortgage for another 2.5 years but I will be renting out my bedrooms till then anyway. Im only 28, not married so why not.
I hope my equity goes up mid year or at least towards the end of the year... then I hope I can make another purchase... but time will tell.
Yeah you are right although my offset account is only at 40%... cos its fixed.
But still might be better to chuck it in cos my loan is 285 K.
Ditto for us too. We sold our family home at the top of the then Melbourne property market in 2003 and reinvested the proceeds into another commercial property in the same suburb. Went from monthly mortgage repayments of $6000 pcm to rental payment of $2500 pcm, currently $2980.
Its not for everyone but getting off the trophy home ownership treadmill has been a real eye opener. The kids and the wife took some time to accept it but now appreciate that provided your disciplined with the freed up funds it is a much quicker path to financial independence.
Very well said. The number of people I've spoken to that say "you can't put a price on the emotional value of owning your own home" just haven't done the sums. You obviously have and the price is $42k per year; good decision IMHO.
$6000 per month is a very large mortgage and most home owners would be paying far far less so the argument doesn't hold in most cases although it sounded like a wise move for nr. Our PPOR loan is around $1000pcm (and this is covered by our boarder.)
Renting an equivalent house would cost us an extra $44K per year
With young children and two businesses on the go I couldn't think of anything worse than moving whenever the landlord decided to sell / move back in etc. I don't want my life turned upside down on 60 days notice.
I know that many buy a first home that strains their budget and then regularily trade up making investing almost impossible but this behaviour is quite seperate from arguing that owning your own home does not make sense.
Renting an equivalent house would cost us an extra $44K per year
With young children and two businesses on the go I couldn't think of anything worse than moving whenever the landlord decided to sell / move back in etc. I don't want my life turned upside down on 60 days notice.
I know that many buy a first home that strains their budget and then regularily trade up making investing almost impossible but this behaviour is quite seperate from arguing that owning your own home does not make sense.
