Gbye grey sky Posted August 23, 2015 Share Posted August 23, 2015 I think you got it wrong there. Unlike a homeowner, as a renter you don't have to spend any money on home maintenance, repairs (try calling a plumber/electrician and see how fast your pockets get emptied!), council rates, water rates, fire levies, home insurance etc etc. I would strongly advise people against falling for the usual pressure tactics employed to make them panic and rush into buying a property, as if it is a now or never situation. One of the most ridiculous reasons that people say they're happy they bought is the fact that they can drive nails into walls and hang pictures at whim. I can almost picture them rushing with a hammer and box of nails, the minute they get possession...lol. Unless you can afford to take on very little or at least a very manageable amount of debt to buy property in a place where you see yourself living for at least 10+ years (it is very expensive to buy and sell property and you don't have the same freedom as a renter), I'd say you're better of renting in very desirable suburbs without the stress of a huge mortgage hanging like a sword over your head I agree. Buying should always be viewed as a medium/long term thing. I first bought a flat in 1989 in Surrey. The property market crashed in the 90s but by the time I sold in 2004 it had recovered to 300% of what I had paid for it. My house in Surrey I then owned for 11 years and am now buying our first home in Australia, mortgage-free. As a rule of thumb I would suggest that you should anticipate living in the house you buy for 10 years. If you cannot envisage that, maybe you are better off renting. Buying and selling (and the cost of ownership) just eats money but for me it is about putting down roots - and that has no price as far as I am concerned anyway. Quote Link to comment Share on other sites More sharing options...
Parley Posted August 23, 2015 Share Posted August 23, 2015 When you are renting you are simply paying off your landlord's mortgage rather than your own. He appreciates you buying his house for him. Quote Link to comment Share on other sites More sharing options...
Chortlepuss Posted August 23, 2015 Share Posted August 23, 2015 Rental market in Brisbane is cooling a bit too - But even where you 'save' money by renting it is not the same as owning your home. The security of having your own place (and once paid off a home in retirement) is priceless. I have rented in Oz as we own our own home in the UK and it is not financially viable for us to buy. We keep our family home well maintained and it has been continually let with good tenants who care for the property. My managing agents show a great deal of respect to my tenants. But the dodgy managing agents, the three month inspections here, the complete lack of maintenance and the restrictions of renting a place really gets on my wick. My landlord is a multi-millionaire and it took 6 months of nagging to get a dangerous electrical fault fixed. A lot of the maintenance (e.g. replacing torn fly screens when we move in) we do ourselves as there's no chance of getting landlords to do that kind of thing. Every property we have been in has had its rental price increased on a regular basis (one increase was from $500 to $800 a week - we moved out of that one). We have had 5 rental properties in 9 years and you have to take into account the expense of moving if the landlord wants the property back or wants to jack the rent up to something stupid. If you have a look at properties to buy in Brisbane and compare them to the properties to rent, you will find that people are happy to update and renovate properties to sell but not to rent. I am astounded at the poor quality of some of the rentals here in the sub $800 ballpark - and even so, they still come with restrictions 'no pets' (I've even seen 'no children'). If you want to be shocked, look at the quality of sub $500 houses near the city. Life's too short to dance to some greedy landlord's tune... Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted August 23, 2015 Share Posted August 23, 2015 When you are renting you are simply paying off your landlord's mortgage rather than your own.He appreciates you buying his house for him. Not as simple as that though is it? Whether it is helping to pay a landlords mortgage or giving money to the bank in order to borrow money from them, is like having five bob each way. Besides of course when renting all the chores of repairs/insurance/rates/ etc fall on the owner. The renter has the freedom to leave and not feel tied down to a particular location. Besides landlords have periods of no rent between tenants and the possibility of delinquent renters. If Australia brings into play rules around rental charges and rights of a tenant (which is very much needed)as does a lot of the advanced world, renting will definitely be a very attractive option to buying. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted August 23, 2015 Share Posted August 23, 2015 Rental market in Brisbane is cooling a bit too - But even where you 'save' money by renting it is not the same as owning your home. The security of having your own place (and once paid off a home in retirement) is priceless. I have rented in Oz as we own our own home in the UK and it is not financially viable for us to buy. We keep our family home well maintained and it has been continually let with good tenants who care for the property. My managing agents show a great deal of respect to my tenants. But the dodgy managing agents, the three month inspections here, the complete lack of maintenance and the restrictions of renting a place really gets on my wick. My landlord is a multi-millionaire and it took 6 months of nagging to get a dangerous electrical fault fixed. A lot of the maintenance (e.g. replacing torn fly screens when we move in) we do ourselves as there's no chance of getting landlords to do that kind of thing. Every property we have been in has had its rental price increased on a regular basis (one increase was from $500 to $800 a week - we moved out of that one). We have had 5 rental properties in 9 years and you have to take into account the expense of moving if the landlord wants the property back or wants to jack the rent up to something stupid. If you have a look at properties to buy in Brisbane and compare them to the properties to rent, you will find that people are happy to update and renovate properties to sell but not to rent. I am astounded at the poor quality of some of the rentals here in the sub $800 ballpark - and even so, they still come with restrictions 'no pets' (I've even seen 'no children'). If you want to be shocked, look at the quality of sub $500 houses near the city. Life's too short to dance to some greedy landlord's tune... Exactly my point. Rental laws need to be in place here in Australia that clearly protects the tenant from parasite landlords. Fairness on both sides and renting ceases to be regarded as a poor second class option of living. Quote Link to comment Share on other sites More sharing options...
Parley Posted August 23, 2015 Share Posted August 23, 2015 If you are paying $600 per week rent that is over $30000 per year. You have to earn close to $50K just to cover that. Seems like a waste of money to me renting. I would much rather be paying off an asset I own. I would only rent if I was very sure that the house market was going to fall substantially soon and it would help me buy in cheaper within a year or 2. Quote Link to comment Share on other sites More sharing options...
Gbye grey sky Posted August 23, 2015 Share Posted August 23, 2015 If you are paying $600 per week rent that is over $30000 per year. You have to earn close to $50K just to cover that. Seems like a waste of money to me renting. I would much rather be paying off an asset I own. I would only rent if I was very sure that the house market was going to fall substantially soon and it would help me buy in cheaper within a year or 2. Yes, but if you did not know where you wanted to live or expect to be moving in a couple of years from now you would spend more than that on buying/selling fees alone and might not get back what you paid for the house. I think its simple really. Buy for long term, rent for short term. Quote Link to comment Share on other sites More sharing options...
Guest Anya Posted August 23, 2015 Share Posted August 23, 2015 (edited) If you are paying $600 per week rent that is over $30000 per year. You have to earn close to $50K just to cover that. Seems like a waste of money to me renting. I would much rather be paying off an asset I own. I would only rent if I was very sure that the house market was going to fall substantially soon and it would help me buy in cheaper within a year or 2. If you're paying $600 a week then the same house is going to cost you $1.56 million to buy. How many can afford that? Advantage with renting the same home is that you can afford to live closer to work, transport, desirable school zone etc. If prices weren't so ridiculous and the cost of ownership was only slightly more than renting then yes, it would be a no brainer. Afterall who doesn't want to enjoy the security of having some stability and not having to move often. Buying is not for everyone though. Lot of risks (interest rate, jobs, etc) with home ownership too. Edited August 23, 2015 by Anya Quote Link to comment Share on other sites More sharing options...
Peach Posted August 23, 2015 Share Posted August 23, 2015 renting will definitely be a very attractive option to buying. Renting won't truly be attractive until landlords allow folk to live in their properties after retirement for free, similar how homeowners do when the mortgage is paid off -- and that aint going to happen. Quote Link to comment Share on other sites More sharing options...
Guest Anya Posted August 23, 2015 Share Posted August 23, 2015 Renting won't truly be attractive until landlords allow folk to live in their properties after retirement for free, similar how homeowners do when the mortgage is paid off -- and that aint going to happen. If renters have saved diligently (like we did) then as retirees they could buy a small place 1-2 bed townhouse/unit in any state where prices are much lower (than say, Sydney or Melbourne). Retirees don't have to worry about distance to CBD/work, school catchment zone etc, so could live in much lower priced properties. Quote Link to comment Share on other sites More sharing options...
Peach Posted August 23, 2015 Share Posted August 23, 2015 If renters have saved diligently (like we did) then as retirees they could buy a small place 1-2 bed townhouse/unit in any state where prices are much lower (than say, Sydney or Melbourne). Retirees don't have to worry about distance to CBD/work, school catchment zone etc, so could live in much lower priced properties. Alternatively, they could have bought a house and downsized -- horses for courses.. Quote Link to comment Share on other sites More sharing options...
Gbye grey sky Posted August 23, 2015 Share Posted August 23, 2015 If you're paying $600 a week then the same house is going to cost you $1.56 million to buy. How many can afford that? Advantage with renting the same home is that you can afford to live closer to work, transport, desirable school zone etc. If prices weren't so ridiculous and the cost of ownership was only slightly more than renting then yes, it would be a no brainer. Afterall who doesn't want to enjoy the security of having some stability and not having to move often. Buying is not for everyone though. Lot of risks (interest rate, jobs, etc) with home ownership too. Your figures are well off. Around here a $600 a week property will cost you around $600,000 to buy. For an investor that represents around a 5% gross return (around 3% net of costs). €1.5 million properties would definitely have to fetch over $1000 a week in rent or they are not a viable purchase. $600,000 would still mean higher monthly mortgage payments than $600 a week unless someone had a very substantial deposit. Quote Link to comment Share on other sites More sharing options...
Guest Anya Posted August 23, 2015 Share Posted August 23, 2015 Not really. In the suburb I live in (an eastern suburb in Melbourne), the rental yields are 1.5% (gross). Whereas I used a more generous 2% to arrive at an approximate $1.56 million. Higher yields can be obtained in mostly regional suburbs. I've been to 100's of auctions around here and have kept an eye on the rent whenever they come on to the market to get an idea of rental yields. Quote Link to comment Share on other sites More sharing options...
Guest Anya Posted August 23, 2015 Share Posted August 23, 2015 (edited) Alternatively, they could have bought a house and downsized -- horses for courses.. It is not the size of the house but location and amenities that determine property prices. So a renter could live in a location which is in the desired primary/secondary school zone and reasonably close to the workplace. Such considerations are not important in retirement, hence property can be bought at a cheaper price. Edited August 23, 2015 by Anya Quote Link to comment Share on other sites More sharing options...
Parley Posted August 23, 2015 Share Posted August 23, 2015 Most people don't want to rent in Melbourne their whole working life and then have to retire in Tasmania. It is best to get in the market and buy when you can. Quote Link to comment Share on other sites More sharing options...
Guest Anya Posted August 23, 2015 Share Posted August 23, 2015 Regional Victoria, Adelaide isn't very expensive... Quote Link to comment Share on other sites More sharing options...
bristolman Posted August 23, 2015 Share Posted August 23, 2015 Regional Victoria, Adelaide isn't very expensive... Isn't it a shame though that people have to go less desirable places because they get priced out of the market. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted August 23, 2015 Share Posted August 23, 2015 This is something that I've been thinking about for when I come back to the UK and "grow up". I don't particularly want to rent forever but it would be hard for me to buy something plus there's all the other costs that go with it. So I'll probably just rent till I find someone and then hopefully buy somewhere together No! No! No! I made exactly the same mistake when my first marriage broke up. I felt that if I bought a flat, I'd be admitting that I was never going to find another fella and I'd be an old spinster. That was such stupid thinking. At the same time, one of my friends was in the same boat - she bought a flat, and when she moved in with her oh, she just kept it and rented it out. Eventually they sold it and bought a place together - which they probably wouldn't have been able to afford without the profit from her flat. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted August 23, 2015 Share Posted August 23, 2015 (edited) If you are paying $600 per week rent that is over $30000 per year. You have to earn close to $50K just to cover that. Seems like a waste of money to me renting. I would much rather be paying off an asset I own. I would only rent if I was very sure that the house market was going to fall substantially soon and it would help me buy in cheaper within a year or 2. The trouble with that attitude in Australia is that you will pay at least a year's rent in stamp duty alone when buying a house. So if you're not sure how long you'll be living in that area, you may end up well out of pocket. I do agree that buying is much better than renting if you're going to live somewhere long-term. I used to have a spreadsheet where you could calculate the break-even point for buying vs. renting, taking into account things like stamp duty,increase in value, expenses etc. Usually the break-even point was somewhere around the 5 year mark. Edited August 23, 2015 by Marisawright Quote Link to comment Share on other sites More sharing options...
bristolman Posted August 23, 2015 Share Posted August 23, 2015 The trouble with that attitude in Australia is that you will pay at least a year's rent in stamp duty alone when buying a house. So if you're not sure how long you'll be living in that area, you may end up well out of pocket. Yes, true. With house prices continuing to go through the roof stamp duty is a real killer. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted August 23, 2015 Share Posted August 23, 2015 Yes, true. With house prices continuing to go through the roof stamp duty is a real killer. I wish I still had that spreadsheet, because I'm guessing the break-even point would be much earlier in the UK than in Australia, since stamp duty is quite a bit lower. Quote Link to comment Share on other sites More sharing options...
bristolman Posted August 23, 2015 Share Posted August 23, 2015 I wish I still had that spreadsheet, because I'm guessing the break-even point would be much earlier in the UK than in Australia, since stamp duty is quite a bit lower. Yes it would be lower for sure, stamp duty in Australia can be a scary extra especially as I say with prices for even average homes going through the roof. Quote Link to comment Share on other sites More sharing options...
rammygirl Posted August 23, 2015 Share Posted August 23, 2015 Stamp duty in SA is really high. It certainly focuses the mind, moving after a couple of years would lose you money for sure Quote Link to comment Share on other sites More sharing options...
Wooba Posted August 23, 2015 Share Posted August 23, 2015 (edited) When you are renting you are simply paying off your landlord's mortgage rather than your own.He appreciates you buying his house for him. I can tell you there are many, many "landlords" in Canada who've bought at such inflated prices that they are subsidizing their tenants. I know what my landlord pays in taxes and condo (strata) fees. I'm effectively paying him about $710 a month. This is for a nice place in a decent area right next to a subway (metro/underground) station. This is in Toronto which is very comparable to Melbourne/Sydney. So I can thank him for believing the widely held belief of the infallibility of real estate as an investment for subsidizing my lifestyle. Edited August 23, 2015 by Wooba Quote Link to comment Share on other sites More sharing options...
Wooba Posted August 23, 2015 Share Posted August 23, 2015 I think her hubby is on a bit more than a taxi driver and she's not a cleaner. They have a couple of investment properties so they are doing a bit better than the American couple. America also got a caning from the GFC and it was mostly the American banks, Fannie May and Freddie Mac loan companies that caused it. So their strategy to protect themselves from a downturn in the economy/housing market is owning more housing? That's the definition of risk and placing ones eggs in one basket. Like betting it all on black, can work out handsomely or can cost you everything. Quote Link to comment Share on other sites More sharing options...
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