Financially smart or dumb?

[TMNT]

Just saw this article

http://theage.domain.com.au/real-estate-news/long-term-hotel-living-in-melbourne-20140619-zsf0w.html

to me unless you have a huge income, or DINK, choosing to spend $700 per week for the average person is a bit extreme,

no doubt people on SS are investors and more savvy that if they were in the exact same situation, they would surely go for a $400 per week 1bdr in the city or even $300 per week in shared accomodation

 

[sanj]

Nothing wrong with it if it's part of an overall plan and you're still getting good gains/maximizing opportunities elsewhere

 

[Jamie M]

Each to their own I suppose.

I can see how it would work for some - particular the guy that just returned from London.

Not for me though.

Cheers

Jamie

 

[D.T.]

I'd do it.
Get room and bathroom cleaned every day. Never have to worry about replacing sheets or toiletries or whatever.
Never have to worry about rental inspections (cuz the hotel is taking care of the place) or paying a bond or getting evicted cuz owner wants to mover back in.

Rent is fairly comparable to a place of similar condition, location, facilities.

 

[TMNT]

I can also imagine him complaining in a few years time or sooner saying that house prices are too expensive, and there is no way he can save up for a deposit, and the government should bail him out and kill all evil home owners for making his life so difficult


obviously, if its a short term (<1 year) stay then yes I think its a good idea,

 

[Kinnon Bell]

I wouldn't mind it, and I don't think it would work out that much more expensive than renting once all the costs are taken into consideration - might even work out cheaper.

$700 week to stay, but you don't have to pay:
cleaner $80
Pay TV $15
Insurance $10
Body Corp $50
Rates $50
Utlities $70

So that's a very rough $275 per week saving that you would be otherwise spending making the 'rent' quite a bit cheaper.

Added costs could be though a laundromat and and PO Box.

 

[sanj]

I can also imagine him complaining in a few years time or sooner saying that house prices are too expensive, and there is no way he can save up for a deposit, and the government should bail him out and kill all evil home owners for making his life so difficult


obviously, if its a short term (<1 year) stay then yes I think its a good idea,

And what are you basing this on?

In the last 8 years I have lived in a PPOR for 15 months and rented the rest of the time. Plenty of other people I know choose to rent, personally I think my capital is far too previous to waste it on buy and hold resi investments which is what a PPOR is.

I know someone who sold his house and is paying $2200 a week in rent. Sounds crazy but the capital he freed up has made hin around $1.5m in the last 18 months alone and I expect him to make the same again in next 12 months.

Obviously an extreme example but shows that paying a fair bit in rent isn't always a bad idea.

 

[TMNT]

I wouldn't mind it, and I don't think it would work out that much more expensive than renting once all the costs are taken into consideration - might even work out cheaper.

$700 week to stay, but you don't have to pay:
cleaner $80
Pay TV $15
Insurance $10
Body Corp $50
Rates $50
Utlities $70

So that's a very rough $275 per week saving that you would be otherwise spending making the 'rent' quite a bit cheaper.

Added costs could be though a laundromat and and PO Box.

um, renters dont pay for insurance, body corp or rates! unless it contents insurance which youd still need to pay for a hotel anyway

And what are you basing this on?

the people who do the most complaining are the ones who usually have made active lifestyle choices to be in a financially poor situation down the track

 

[Kinnon Bell]

um, renters dont pay for insurance, body corp or rates! unless it contents insurance which youd still need to pay for a hotel anyway

Heh, true - that's my blonde moment for the day. They may have contents insurance though which I doubt you would have a a hotel as the majority of contents are not yours.

I was basing my calculations on owning and living in vs staying in a hotel.

 

[TMNT]

I know someone who sold his house and is paying $2200 a week in rent. Sounds crazy but the capital he freed up has made hin around $1.5m in the last 18 months alone and I expect him to make the same again in next 12 months.

fair enough, I agree, its all about opportunity costs

 

[sanj]

um, renters dont pay for insurance, body corp or rates! unless it contents insurance which youd still need to pay for a hotel anyway



the people who do the most complaining are the ones who usually have made active lifestyle choices to be in a financially poor situation down the track

So you know the financial situation of the people in question do you? Maybe they made smarter financial decisions in the past that enables them to afford $700/week comfortably

 

[Melbournian]

it depends, if somoene bought your PPOR for a good price, and you are still in the midst of looking for a new PPOR for a good couple of months - that might be the best option.

 

[TMNT]

So you know the financial situation of the people in question do you? Maybe they made smarter financial decisions in the past that enables them to afford $700/week comfortably

no i dont, but the whingers about house prices generally cannot afford it due to lifestyle choices,

 

[jackbak]

to me unless you have a huge income, or DINK, choosing to spend $700 per week for the average person is a bit extreme,

Hi TMNT, I think the word "average" is the key word here. No average person would be living in a hotel, only wealthy or those who want short term accommodation. I would certainly consider it I'd returned from overseas and needed a few months to set myself up.

 

[Peter_Tersteeg]

For the amount of space, it's far more expensive than any rental would be, but there's a significant convenience factor. You don't need to clean up after yourself, only one bill to pay, etc.

A big benefit is that if you're in a job that is migratory in manner, you can simply pick up your life and move with no strings. For a certain type of job and lifestyle, I can understand the appeal.

When I'm on holidays or at a conference, it's kind of liberating to live out of a hotel room for a week or two. I can understand the appeal.

 

[sanj]

no i dont, but the whingers about house prices generally cannot afford it due to lifestyle choices,

True but we're talking about the people in the article and you're extrapolating it to something that has absolutely nothing to do with this.

 

[TMNT]

True but we're talking about the people in the article and you're extrapolating it to something that has absolutely nothing to do with this.

very true on that one, im having one of those days, too much energy, too much time

 

[jackbak]

very true on that one, im having one of those days, too much energy, too much time

LOL, there seems to be a lot of those around here lately!

 

[Mr. Fabulous]

When you take into consideration the associated costs of living in some craphole in suburban hell and getting to and from work everyday PLUS the accumulated time wasted driving/catching public transport PLUS the associated costs (utilities, etc), this could very well be a cheaper alternative.

I know that people I used to work with would balk when I told them how much rent I paid. But when I pointed out how much it cost them to rent and travel to/from work each week and how my situation was actually cheaper than theirs, they shut up pretty quick.

Also, you get someone cleaning your place for you on the daily.

 

[cimbom]

I think it's a good idea if you move around a lot. Most hotels have pools and/or a gym which you can use for free too plus you don't have to clean or pay any bills outside of housing. You wouldn't be able to cook much though