the Rent or Buy thread

[nathanVY]

So we started this discussion (I'm sure it's not he first one ) In my thread, (link if you want to read).


Posting this thread because I'd like to know peoples opinions and maybe get some new ideas.

a) Save money, Buy a house, Be in thousands of $ of debt for most of your life..

b) Save & invest money, rent the house you want to live in, buy an investment property when you have a substantial amount of money or even outright..


Be interested to know ways of short to long term investments. Open to pro's/con's of each one. Renting is something I can't avoid, I'm not in a position to buy a house -but I could probably get in one reasonably quickly if I wanted to.


Discuss.

[Rufys]

Right now...... Rent. Property ownership is not a good investment right now. It will be again at some point.

Long term, buy. But as long as you have a view to own. There is no need to be in a position that means you're paying off a property for a long time.

[SP00KSTER]

rent, easy to do and you can save up money while you rent and then buy a house
or like me you can just live at home.

[88GreenVN]

Buy is just about always the best way to build wealth. If your on the move all the time then renting is the way to go - but have a base home some place being rented out in return. That way when capital growth is on the go, your not losing out to inflation.

But I would not buy right now with all the pending doom clouds hanging around the economy.

[nathanVY]

rent, easy to do and you can save up money while you rent and then buy a house
or like me you can just live at home.

yeah thats what I was thinking.. rent, and use all the extra money to save / invest and then buy a property AS AN INVESTMENT. rent it out straight away, it never affects your personal life.

Buy is just about always the best way to build wealth. If your on the move all the time then renting is the way to go - but have a base home some place being rented out in return. That way when capital growth is on the go, your not losing out to inflation.

But I would not buy right now with all the pending doom clouds hanging around the economy.

Is it? or is it the thing everyone does?

Interesting I would've thought now is the best time to buy a house, the market is at its lowest point in years is it not ?

[Big_Simmo]

Oor you could buy a place and rent out rooms

But yeah id just rent a place n save to get an investment property.
I did that then when I was 22 I bought my own place while renting out the 2 others.
All i can say for more advice is get income protection, I never had it and the 9 months in hospital then the 21months without an income ended up with me selling it all off

[elmaso]

buying a house is obviously the best bet, but $300,000+ for a fair house is completely ridiculous.
most you can do now is save!
renting is good for the time being, but i have my doubts you pack up and live in a cheap place around norlane/whittington to be able save like crazy. hahaha

[GEN3RATD]

just buy a lambo

you can live in a car but you cant race a house

[nathanVY]

Oor you could buy a place and rent out rooms

But yeah id just rent a place n save to get an investment property.
I did that then when I was 22 I bought my own place while renting out the 2 others.
All i can say for more advice is get income protection, I never had it and the 9 months in hospital then the 21months without an income ended up with me selling it all off

Haha dude, i'm going to be newly married. Not having anyone else in my house :

For a good few years at least

income protection would be a good idea if I had loans etc to pay, will keep it in mind, cheers.

[minux]

If you are building, I'd buy. If you plan on not building, rent.

I personally would not be buying to invest at the moment. Rent is not even close to covering the average mortgage and you will be out of pocket far too much. It is why all these stupid investors are going belly up. Over borrowed on over inflated properties, now the market is slowing they are suffering.

[Rufys]

I personally would not be buying to invest at the moment. Rent is not even close to covering the average mortgage and you will be out of pocket far too much. It is why all these stupid investors are going belly up. Over borrowed on over inflated properties, now the market is slowing they are suffering.

With the exception of Canberra... There will always be a nice investment bubble there thanks to Defence HQ and the Federal Public Service.

[nathanVY]

If you are building, I'd buy. If you plan on not building, rent.

I personally would not be buying to invest at the moment. Rent is not even close to covering the average mortgage and you will be out of pocket far too much. It is why all these stupid investors are going belly up. Over borrowed on over inflated properties, now the market is slowing they are suffering.

Yeah that's a fair point. I'd be looking at a few years before having the funds to do so in any case, re-evaluate then I guess.
Surely renting & saving until you have a significant amount, like 50% of the house you want to buy is better than bursting onto the home buyers market and getting a 80-90% loan.

It's not really about buying houses for me it's about being in debt. Debt is much more binding than a lease agreement.

Everyone I know is in debt, so much of it. Why should I be?

[minux]

Yeah that's a fair point. I'd be looking at a few years before having the funds to do so in any case, re-evaluate then I guess.
Surely renting & saving until you have a significant amount, like 50% of the house you want to buy is better than bursting onto the home buyers market and getting a 80-90% loan.

It's not really about buying houses for me it's about being in debt. Debt is much more binding than a lease agreement.

Everyone I know is in debt, so much of it. Why should I be?

Lets say you could buy a house now for 300k. You have 30k saved so you borrow 270k + duties. Based on the past 3 years of growth in Geelong, in 3 years time your house you could have bought for 300k is now selling for 430k. You have saved another 50k. You are still borrowing more and will pay more for duties. Had you bought 3 years ago you could be selling at a profit and have more money to put towards a better house. This is why appreciating assets are so much better than saving, while you pump heaps into principal your asset is appreciating so you are not only "making" money you are reducing your debt so when you sell you have made more than you could of saved. This does not work all the time but for the financially sound it is almost foolproof. Has certainly worked for us the past 10 years.

One thing my dad taught me that always sticks in my mind. Buy land, they are not making any more of it!

[Rufys]

One thing my dad taught me that always sticks in my mind. Buy land, they are not making any more of it!

I heard the same thing and it stuck... But from Tony Soprano when he was talking to AJ! lol

[minux]

I heard the same thing and it stuck... But from Tony Soprano when he was talking to AJ! lol

Never watched the show sorry .

Edit: Just googled the phrase, seems it was one of Mark Twains.

PS: Best investment at the moment is the US. Can pick up great houses for less than a new calais.

[nathanVY]

Lets say you could buy a house now for 300k. You have 30k saved so you borrow 270k + duties. Based on the past 3 years of growth in Geelong, in 3 years time your house you could have bought for 300k is now selling for 430k. You have saved another 50k. You are still borrowing more and will pay more for duties. Had you bought 3 years ago you could be selling at a profit and have more money to put towards a better house. This is why appreciating assets are so much better than saving, while you pump heaps into principal your asset is appreciating so you are not only "making" money you are reducing your debt so when you sell you have made more than you could of saved. This does not work all the time but for the financially sound it is almost foolproof. Has certainly worked for us the past 10 years.

One thing my dad taught me that always sticks in my mind. Buy land, they are not making any more of it!

Brilliant points mate, thanks a lot. I guess I'm wanting to research into other types of appreciating assets other than property - ones on a smaller scale perhaps. For example, what about buying a cabin in a caravan park or something? 30-50k easily paid off quickly.

[HamaTime™]

Lol at the people who would buy one house and rent it out (investment property) and go live in a rental property yourself..

Clearly you haven't heard of the tax advantages of living in your own home (which is still an investment). Principal place of residence is exempt from land tax/Capital Gains tax (when you sell it).

If you rent, that's DEAD money. It's like paying for petrol....it keeps you going, but you never get anything back, and it always gets more expensive.

If you buy your own home, you have the advantage of capital growth (property appreciates) and you have a foundation of EQUITY. Which you can use as security for loans.

[ari666]

housing prices make buying a bad option. ima wait until all the people (who are financed to the hilt) start defaulting on their loans, so i can get something at a reasonable price.

with the mining boom the way it is, it wont be too long before ppl can no longer afford their 100% financed house.

[The pig]

At the moment is all much of a muchness, though 2 years ago i bought a block for 99 k a month later the blocks around mine jumped to 140 k and they didnt drop so i was lucky, they say real estate is the only real investment eg a 60 k hsv aint worth half that five years down the track but a house will fluctuate i built for 310 k and got it valued last month at 415 k so it went up but next month who knows it could only be worth 320 k its a tricky market at the moment if u can rent and save all the power to ya dude im tryin to get my 69 camaro rebuilt but at the moment ive got no hope.

[nathanVY]

Lol at the people who would buy one house and rent it out (investment property) and go live in a rental property yourself..

Clearly you haven't heard of the tax advantages of living in your own home (which is still an investment). Principal place of residence is exempt from land tax/Capital Gains tax (when you sell it).

If you rent, that's DEAD money. It's like paying for petrol....it keeps you going, but you never get anything back, and it always gets more expensive.

If you buy your own home, you have the advantage of capital growth (property appreciates) and you have a foundation of EQUITY. Which you can use as security for loans.

Yeah I do agree with some of what you're saying. But it looks like I'm the only one who thinks that having 200K+ of debt over most of your life is a bad thing! Our whole country is immersed in debt why should we have to do the same thing ?

Sure, I can buy a house, land etc. Then my life is set in stone for the next 25 years, I must work 5 days + a week, end of story. I can't scoot overseas and work there (unless I can afford to pay a mortgage and accommodation over there ), and selling your house and buying somewhere else is just not that simple.

I mean, you spend your whole life paying off a house that's alright. you stay in the one area, you finally pay off the loan and then you die. awesome.

You only live once - if it's getting you by , what else does it need to do ? sure we need to invest for the future but not at the expense of our quality of life.

[RIP 05]

Yeah that's a fair point. I'd be looking at a few years before having the funds to do so in any case, re-evaluate then I guess.
Surely renting & saving until you have a significant amount, like 50% of the house you want to buy is better than bursting onto the home buyers market and getting a 80-90% loan.

It's not really about buying houses for me it's about being in debt. Debt is much more binding than a lease agreement.

Everyone I know is in debt, so much of it. Why should I be?

How much are looking at buying a house for, 50% deposit would take awhile to save, as well as paying rent.

[minux]

Yeah I do agree with some of what you're saying. But it looks like I'm the only one who thinks that having 200K+ of debt over most of your life is a bad thing! Our whole country is immersed in debt why should we have to do the same thing ?

Sure, I can buy a house, land etc. Then my life is set in stone for the next 25 years, I must work 5 days + a week, end of story. I can't scoot overseas and work there (unless I can afford to pay a mortgage and accommodation over there ), and selling your house and buying somewhere else is just not that simple.

I mean, you spend your whole life paying off a house that's alright. you stay in the one area, you finally pay off the loan and then you die. awesome.

You only live once - if it's getting you by , what else does it need to do ? sure we need to invest for the future but not at the expense of our quality of life.

I'd rather work hard when I am younger and retire earlier based on my assets I acquired by doing so.

By age 40 we will have multiple properties owned outright and that is with a conservative budget. Why anyone would take 25 years to pay off a loan is beyond me. With hard work it can be done as quickly as paying off a car loan...

As for quality of life, not sure how that is affected, I own a new car, my wife has a new car, we have new furniture, new electrical products etc, we go out for dinner when we feel like it. No quality of life affected here.

Either way, I will laugh at those who decided to live large and not invest in their future working at 65, while I kick back with the mrs on the yacht in the south pacific.

PS: Do you plan on having children any time after you are married? There goes your quality of life there. Worst depreciating asset ever.

[nathanVY]

How much are looking at buying a house for, 50% deposit would take awhile to save, as well as paying rent.

Not sure. Just researching all my options at this point. 50% was just a random figure but you get the idea, own a substantial portion from the beginning.


Surely there are other kinds of investment! anyone?

[HamaTime™]

Yeah I do agree with some of what you're saying. But it looks like I'm the only one who thinks that having 200K+ of debt over most of your life is a bad thing! Our whole country is immersed in debt why should we have to do the same thing ?

Sure, I can buy a house, land etc. Then my life is set in stone for the next 25 years, I must work 5 days + a week, end of story. I can't scoot overseas and work there (unless I can afford to pay a mortgage and accommodation over there ), and selling your house and buying somewhere else is just not that simple.

I mean, you spend your whole life paying off a house that's alright. you stay in the one area, you finally pay off the loan and then you die. awesome.

You only live once - if it's getting you by , what else does it need to do ? sure we need to invest for the future but not at the expense of our quality of life.

See the thing which your uncertain about is the 'debt' factor. To invest, to make money, you have to spend, and most times in any way shape or form, you have to go into debt to make money. I.e. business or personal investment. This is a good debt because it is investment/capital growth/return oriented rather than a depreciating debt.

It really comes down to the lifestyle you want to live though. If you want a carefree/responsibility free life where you can just up and move/go overseas for half a year, then yes, buying is not an option. But see, if you bought a house, you don't need to live in that house/own that house for the entire duration of your mortgage. You can sell that property and move onto another property, you get the capital gains of the increased sale value of your previous house etc etc... No buying and selling is a more complicated process. But once again, it really comes down to what you want in life.

My goal in life is to build a large and successful career, have a family, have multiple investments, and wrap up paid work prior to preservation age (65) and travel/enjoy life's benefits then.

Not to mention I want a sizeable inheritance for my kids, generational wealth transfer is important to me.

So basically what we are actually dealing with is what you essentially want in life....tailor your investment plan around that.

[HamaTime™]

I'd rather work hard when I am younger and retire earlier based on my assets I acquired by doing so.

By age 40 we will have multiple properties owned outright and that is with a conservative budget. Why anyone would take 25 years to pay off a loan is beyond me. With hard work it can be done as quickly as paying off a car loan...

As for quality of life, not sure how that is affected, I own a new car, my wife has a new car, we have new furniture, new electrical products etc, we go out for dinner when we feel like it. No quality of life affected here.

Either way, I will laugh at those who decided to live large and not invest in their future working at 65, while I kick back with the mrs on the yacht in the south pacific.

PS: Do you plan on having children any time after you are married? There goes your quality of life there. Worst depreciating asset ever.

As I explained in my previous post...

Minux, you and I share the same goals