Does Anyone Still Rent?
- Thread starter LisaS
- Start date
we still rent, the cost of renting is definately cheaper than the mortgage for a house of the same standards.
If you are lucky enough to receive a rental subsidy aswell from your employer than I guess that is the clincher.
Not to say that we dont want our own home, just that it is not financially viable yet.
If you are lucky enough to receive a rental subsidy aswell from your employer than I guess that is the clincher.
Not to say that we dont want our own home, just that it is not financially viable yet.
Renting is much cheaper than purchasing your own home. If the rental return on an appartment is 2-3%, I'd love to know how you can own it for less!
You also don't have to spend money on rates, repairs, etc.
The are several upsides to owning however.
1. The emotional factor. The house is yours, the payments contribute to your equity, not someone elses.
2. Rents go up over time due to demand and inflation. Unless you're continuously refinancing and drawing down equity, your repayments won't change beyond the effect of interest rates.
3. You can do almost whatever you like with your own home.
We recently bought our own home (after renting and investing for many years). We're looking forward to having fewer neigbours, more space, a workshop (
), and we can even get a dog!
You also don't have to spend money on rates, repairs, etc.
The are several upsides to owning however.
1. The emotional factor. The house is yours, the payments contribute to your equity, not someone elses.
2. Rents go up over time due to demand and inflation. Unless you're continuously refinancing and drawing down equity, your repayments won't change beyond the effect of interest rates.
3. You can do almost whatever you like with your own home.
We recently bought our own home (after renting and investing for many years). We're looking forward to having fewer neigbours, more space, a workshop (
), and we can even get a dog!PT_Bear said:Renting is much cheaper than purchasing your own home. If the rental return on an appartment is 2-3%, I'd love to know how you can own it for less!
You also don't have to spend money on rates, repairs, etc.
The are several upsides to owning however.
1. The emotional factor. The house is yours, the payments contribute to your equity, not someone elses.
2. Rents go up over time due to demand and inflation. Unless you're continuously refinancing and drawing down equity, your repayments won't change beyond the effect of interest rates.
3. You can do almost whatever you like with your own home.
We recently bought our own home (after renting and investing for many years). We're looking forward to having fewer neigbours, more space, a workshop (
I agree.
Fortunately I rent and also have space, workshop, dog (and cat) and great neighbours.
GarryK
I rent also, my share of the rent is half that of a mortgage repayment of a property similar to what I would like to live in.
As long as you put the extra money to good use, invest elsewhere for solid capital gains and income then it is worthwhile. The downside of renting would be if you didnt set extra aside for other investing and just spent it on living.
As long as you put the extra money to good use, invest elsewhere for solid capital gains and income then it is worthwhile. The downside of renting would be if you didnt set extra aside for other investing and just spent it on living.
LisaS said:My question is simple. Is there anyone out there who rents and invests as opposed to having a PPOR and investing?
What would you say are the pro's and/or cons of one vs the other?
Lisa
Another Pro of renting is that if you run a business from home, a portion of your rent is tax deductible according to how big your home office is. Naturally I would select the biggest room in the house!
Just on this point, I saw a waterside mansion with own boat pontoon in Brisbane for rent for $550 a week. The same in mortgage repayments would get a 3 bed apartment with no water views.
On a servicibility note, the banks don't ask for your rent slips, so if you're 'sharing' with other flatmates your rent won't be too much.
Brendon
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We rent due to
- Savings. We rent a house for 220pw, worth about 550-600K. LOL. Its in a bayside lifestyle location 10k from the cbd, 3br, central heating, dlug etc ... to a landlord that lives interstate. Been there for 3yrs, will stay for as long as we can stretch it out. Insane.
- Flexibility. If we choose, we can move anywhere we want, as our circumstances change. Over the years my wife and I have worked in various locations around melbourne. You know how nice it has been to be able to move house to make the commute more sensible? Plus as our child grows up, we can elect to live close to any schools we want.
- Deductions. We claim a home office. 1/5th of our rent, plus all the other deductions that go with it - some heating, cleaning, furniture etc. I think this gets complicated if you try do this in your own home.
- PPOR - Down the track we may briefly own the odd PPOR for a short while every now and then. This all depends on what developments i'm doing, and whether they are structured within our trust(s), with JVA's etc.
- Real PPOR - never want to own one. I'd rather be mobile - sailing round the mediterranean, skiing Aspen etc etc (or whatever the wife wants anyway lol) I'm thinking of investing O/S so I can do yearly 'check-ups' on my ip's. Imagine a lifetime of tax deductible holidays.
- Savings. We rent a house for 220pw, worth about 550-600K. LOL. Its in a bayside lifestyle location 10k from the cbd, 3br, central heating, dlug etc ... to a landlord that lives interstate. Been there for 3yrs, will stay for as long as we can stretch it out. Insane.
- Flexibility. If we choose, we can move anywhere we want, as our circumstances change. Over the years my wife and I have worked in various locations around melbourne. You know how nice it has been to be able to move house to make the commute more sensible? Plus as our child grows up, we can elect to live close to any schools we want.
- Deductions. We claim a home office. 1/5th of our rent, plus all the other deductions that go with it - some heating, cleaning, furniture etc. I think this gets complicated if you try do this in your own home.
- PPOR - Down the track we may briefly own the odd PPOR for a short while every now and then. This all depends on what developments i'm doing, and whether they are structured within our trust(s), with JVA's etc.
- Real PPOR - never want to own one. I'd rather be mobile - sailing round the mediterranean, skiing Aspen etc etc (or whatever the wife wants anyway lol) I'm thinking of investing O/S so I can do yearly 'check-ups' on my ip's. Imagine a lifetime of tax deductible holidays.
Hi All,
This is a very interesting topic . . . and depending on circumstances there are different arguments for and against renting.
Methinks a 'Steve' spreadsheet might be useful
I will keep a keen eye on this thread as it develops and then attempt to include everyone's preferences in the calculations.
Expect the "Rent V's Property" spreadsheet soon after the next Sydney Course.
Regards,
Steve
This is a very interesting topic . . . and depending on circumstances there are different arguments for and against renting.
Methinks a 'Steve' spreadsheet might be useful
I will keep a keen eye on this thread as it develops and then attempt to include everyone's preferences in the calculations.
Expect the "Rent V's Property" spreadsheet soon after the next Sydney Course.
Regards,
Steve
Zoran said:
Hmmm. good question.
We have established that by renting you get all the aforementioned benefits.
To rent to yourself ..
Questions to ask..
a) What are the benefits to your plan?
b) Is it legal/Questionable/Does it adversely affect your risk level
c) Does it affect your serviceability - By renting your IPs out at correct market rates you are helping your cashflow and serviceability. ie dont shortchange yourself
Anyone wanna run some numbers, assuming it is achievable legally?
Hi all,
We're different, we own our PPOR, no repayments.
When we first bought a PPOR, we paid it off in 6 years, and that was when interest rates were high(80's).
We borrow against our PPOR for investment.
We still have our asset that grows.
The children have a place called home.
If we ever wanted to change, we could move into one of the IPs and sell PPOR(tax free) to reduce debt.
bye
We're different, we own our PPOR, no repayments.
When we first bought a PPOR, we paid it off in 6 years, and that was when interest rates were high(80's).
We borrow against our PPOR for investment.
We still have our asset that grows.
The children have a place called home.
If we ever wanted to change, we could move into one of the IPs and sell PPOR(tax free) to reduce debt.
bye
Thommo said:
Hi Thommo,
I dont think the issue is that home owners can't afford to own their own home, its that they choose not to because the money can be put to better use somewhere else.
I rent at the moment, much for the same reasons Pitt_St, Jum Jones and others have said. I pay relatively low rent for a nice apartment 2 streets from work and 2 streets from the beach, in an area I like to live.
I can afford to buy the place I live in if I wanted... but to do so would mean paying more than double in loan repayments what I pay in rent. Conversely, I could afford to buy 3-4 investment properties and contribute less out of my pocket than I would paying off my own mortgage.
I also have no family and dont have that emotional need to "own my own house" people have talked about. I prefer to put my money into properties which will make me money, rather than cost me money.
Best wishes,
Jamie.
I didn't think that people are saying they can't...certain people are simply choosing not to.Thommo said:
One benefit of renting in a low-yield environment is that you can live in a much higher quality house and/or a nicer neighbourhood than you might possibly be able to buy into.
This gives you free cash to buy more investments
There is no law that says you must own a PPOR at any time in your life. It's purely a habit/tradition/prestige hangover from times when owning property gave you the right to vote & call yourself middle class, supported by depressionary periods where owning the roof over your head reduced your worries.
I expect a greater % of people to choose not to own their own home in the future. I also expect to see more communal houses with several partnered couples choosing to share some of the grass castles that have been built.
I don't see that property prices become less sustainable over time. With a growing population & positive inflation (IMHO likely to continue for a long time) prices today will look cheap in twenty years time.....as prices twenty years ago do by today's standards....and twenty years before that....and so on.
EDIT: Jamie - SNAP!
Cheers,
Aceyducey
