Rent is dead money. Or is it ? - Page 3

blueoval · 17-04-2014, 04:25 PM

There are a lot of unknown factors which will be for/against renting. Every individual is different and some justify their own reasons to live how they live. You do or you dont rent. No one should be bagged for it. I chose to build and own. My friends chose to rent. So be it.

The BIG issue I have is when people who rent, complain they want to get into the market on a struggling wage without looking at their lifestyle and making needed changes to save. You see them constantly raking up credit card/personal debt to buy unnecessary items of luxury so they dont appear to 'miss out' among their friends.

On the otherhand, I cannot stand others who are home owners and whinge to me that they dont have a life because they cannot afford to go out for tea every weekend, or to the movies like they used to, or buy the latest this or that due to hiking up their mortgage to the hilt.

I think this is a topic with no right or wrong ways unless you are just plain selfish and want it all your own way without doing the hard work to get it.

The age old saying of 'live simple and within your means' rings true. Set your priorities right and you'll get there.

HULK_I6T · 17-04-2014, 04:34 PM

Quote:

Originally Posted by turboclown

In your example the property owner has spent 264000 on repayments in ten years, plus rates at say $12000 plus maintenance at say another 20000 which is only 2k a year, plus the stamp duty and fees they paid at purchase of say 10K at least plus the selling fees when they sell up of 15k they have now spent $321000 to get a return of $150000 from the capital gains?? to rent the property would have cost 204000 for that same period so they have put in an extra $117000 to get $150000 a profit of $33000

So Home owner comes out at least 27K behind, add the 57k extra the person who paid a mortgage spent on additional costs if the renter saved that money as well and he ends up even further in front.

Massively failed assumptions you have...

1. My $150,000 estimate is very conservative, the property cycle has proven that every 7-10 years property prices double.. due to uncertain economic conditions ive called a very low number... very low.. read this..

http://www.yourmortgage.com.au/artic...lue-78819.aspx

2. You assume rent prices will stay the same for 10 years?

they will likely double in that time.. (along with house prices)

3. The renter probably paid removal costs 10 times in 10 years, could be more as this is out of their hands sometimes.

This is why renters are often behind, they just dont calculate it properly.

Franco Cozzo · 17-04-2014, 04:40 PM

The person who dies with the most houses and $$$ in the bank is still dead.

turboclown · 17-04-2014, 04:52 PM

Quote:

Originally Posted by f6_benito

Massively failed assumptions you have...

1. My $150,000 estimate is very conservative, the property cycle has proven that every 7-10 years property prices double.. due to uncertain economic conditions ive called a very low number... very low.. read this..

http://www.yourmortgage.com.au/artic...lue-78819.aspx

2. You assume rent prices will stay the same for 10 years?

they will likely double in that time.. (along with house prices)

3. The renter probably paid removal costs 10 times in 10 years, could be more as this is out of their hands sometimes.

This is why renters are often behind, they just dont calculate it properly.

My assumption isnt failed, it is using your exact figures and all the things you didnt account for. Plenty of people rent the same house for years on end, even still whats it cost to move the average house about 2 grand at the most thats only 20k over that 10 years.

If my assumption is flawed its using the exact figures you provided, I like how you want to point out now that the rent will increase, but the home loan repayments wont.

Lots of Home owners end up behind because they dont calculate it properly, like yourself who neglected all the purchasing, ownership and selling costs. The property value increases you want to spruik also have to account for inflation, your 100grand profit you calculate today may only be worth 50k later on.

There are many variables, i used your oversimplified figures to come up with a number.

You seem to look down on renters as if they are somehow not as educated as yourself, I own several properties and rent the one I live in many years in the game and the advice of every Planner I have used has told me im on the right track. I think property is a mugs game especially if it has to come out of your own pocket to make a profit, id rather profit from property that doesnt cost me a cent.

HULK_I6T · 17-04-2014, 06:40 PM

Quote:

Originally Posted by Big Damo

The person who dies with the most houses and $$$ in the bank is still dead.

Some people sit there scratching their heads and wonder... "how does that guy get to drive a prestige new car every year or go on holidays every year?"

Its about planning for tomorrow, using your money wisely. You head is attached to your body to use it for more than just eating.

You have to look further ahead, to see more than 5 feet in front of you.. Otherwise with exactly the same income, when your 50 yrs old, you can either be short of a buck, or be able to enjoy the finer things in life, travel, educate your children, be free to do as you like.

Dont be scratching you head at 50, driving an old car, wondering how the next guy is doing it all..

HULK_I6T · 17-04-2014, 06:47 PM

Quote:

Originally Posted by turboclown

I like how you want to point out now that the rent will increase, but the home loan repayments wont.

I own several properties and rent the one I live in many years in the game and the advice of every Planner I have used has told me im on the right track. I think property is a mugs game especially if it has to come out of your own pocket to make a profit, id rather profit from property that doesnt cost me a cent.

Blind freddy knows that rent will increase over 10 years. Any interest rate spike or appreciation in house prices, the renter gets stung.

But why would a mortgage increase? When you borrow the money they dont increase the amount you borrow each year??. As you pay it, your paying off more and more of the principle in fact reducing the interest payable and more and more of your property is becoming yours. So the payments are adding more and more to your equity. This needs to be added in...

No so for the renter, he/she pays more and more each year with none of it retained.

For someone defending the renting position so galantly, then why do you own properties?

ronnas07 · 17-04-2014, 06:55 PM

If you can rent somewhere that is cheap and in turn that makes it easier for you to save then it makes sense to rent and live comfortably. As long as you save. We were able to do this for 5 years whilst friends around us jumped in and borrowed as much as they could telling us "rent money is dead money". We were then able to put a massive deposit towards our dream house and our mortgage (after only 2 years of repayments) is now at a lower level than what our rent was. Whilst our friends that bought early are now stuck in houses that are too small. So i see arguments for both sides and i agree with both sides...

ronnas07 · 17-04-2014, 06:58 PM

Quote:

Originally Posted by Big Damo

The person who dies with the most houses and $$$ in the bank is still dead.

They also die comfortably, not living off the pension for their remaining years struggling to get by each week

turboclown · 17-04-2014, 07:14 PM

Quote:

Originally Posted by f6_benito

Blind freddy knows that rent will increase over 10 years. Any interest rate spike or appreciation in house prices, the renter gets stung.

But why would a mortgage increase? When you borrow the money they dont increase the amount you borrow each year??. As you pay it, your paying off more and more of the principle in fact reducing the interest payable and more and more of your property is becoming yours. So the payments are adding more and more to your equity. This needs to be added in...

No so for the renter, he/she pays more and more each year with none of it retained.

For someone defending the renting position so galantly, then why do you own properties?

As I said my properties dont cost me a cent, I planned it thst way. Owning property isnt the be all and end all of financial security as it was in the past, everyone has different circumstances and you cant make generalisations about any group we are all different and have needs that differ as well

there is also job security to consider, some people have to relocate for work regularly, if they buy a house and 12 months later have to move and cant afford to buy a second property or rent and a mortgage they wjll most likely loose out, as I said everyones different so too just totally dismiss either option is pretty short sighted.

I dont care what people do one way or the other its up to them and not my place to judge, im just not gonna declare people are stupid or wrong as they are really the only ones that know.

As for why would repayments increase, last time I checked you couldnt fix rates for 30 years chances are they will climb again, we might not hit the cash rate we did under howard as treasurer but they will go up again no doubt.

ford man xf · 17-04-2014, 09:00 PM

I think renting affects you more later in life....like when you retire...and rent is 3 times the price than it was when you were in your twenties...and bills, food, petrol is also 3 times the price you payed when you were in your twenties...and it starts eating into your superannuation because there are no more handouts for the government for example the pension....something to think about...

BHDOGS · 17-04-2014, 11:01 PM

or you get stuck being a mother to a disabled child or a carer on a carer pension for life looking after your sick family member or injured at work on work cover for years to the gov kicks you off. Then you cant afford rent or a house alot of people worse of in life who dont choose to blow there money on smokes or booze rather then buy a house wana get on housing trust? good luck ten year wait unless your a drug addict or a minority of certain colors then your stuck renting, want a long term rental good luck pay your yearly rent increase or your out the house. Housing has to be one of the biggest cons and skewed markets in this country its a crock pandering to rich people who dont wanna give up there negative gearing a never ending cycle of debt spiraling prices shonky agents and poverty entrapment.

HULK_I6T · 17-04-2014, 11:34 PM

Quote:

Originally Posted by BHDOGS

or you get stuck being a mother to a disabled child or a carer on a carer pension for life looking after your sick family member or injured at work on work cover for years to the gov kicks you off. Then you cant afford rent or a house alot of people worse of in life who dont choose to blow there money on smokes or booze rather then buy a house wana get on housing trust? good luck ten year wait unless your a drug addict or a minority of certain colors then your stuck renting, want a long term rental good luck pay your yearly rent increase or your out the house. Housing has to be one of the biggest cons and skewed markets in this country its a crock pandering to rich people who dont wanna give up there negative gearing a never ending cycle of debt spiraling prices shonky agents and poverty entrapment.

Firstly let's not bring the misfortunates into this discussion. People that have special needs deserve special support, no questions there. I know first hand what is required for some people, rent or buy is the least of their concerns. But this discussion should be centred around the average joe, someone that can reasonably shape their future, fair wage, etc etc. some renters try and claim they don't have the same opportunities... Otherwise they would be prime minister etc

There is a common misconception that renters have.. That landlords sit in front of their fireplace bundling cash all night. I bought the house I live in, bought an investment property shortly after, have a young family. Im a landlord and have a mortgage, I need the rent to pay for this mortgage. I'm holding this investment property taking advantage of the capital gain and so I can keep today's price for my child one day to buy or if I can afford it give it to them with whatever equity I have.

BHDOGS · 18-04-2014, 12:19 AM

https://www.youtube.com/watch?v=Vr8I...mndS6qajmw1ydu

HULK_I6T · 18-04-2014, 01:50 AM

Haha... good video..

turboclown · 18-04-2014, 09:34 AM

Quote:

Originally Posted by f6_benito

Firstly let's not bring the misfortunates into this discussion. People that have special needs deserve special support, no questions there. I know first hand what is required for some people, rent or buy is the least of their concerns. But this discussion should be centred around the average joe, someone that can reasonably shape their future, fair wage, etc etc. some renters try and claim they don't have the same opportunities... Otherwise they would be prime minister etc

There is a common misconception that renters have.. That landlords sit in front of their fireplace bundling cash all night. I bought the house I live in, bought an investment property shortly after, have a young family. Im a landlord and have a mortgage, I need the rent to pay for this mortgage. I'm holding this investment property taking advantage of the capital gain and so I can keep today's price for my child one day to buy or if I can afford it give it to them with whatever equity I have.

Plenty of renters dont have the same opportunities though

Franco Cozzo · 18-04-2014, 01:31 PM

Quote:

Originally Posted by ronnas07

They also die comfortably, not living off the pension for their remaining years struggling to get by each week

Or with dementia/Alzheimer's disease in an aged care facility they lock you up in and throw away the key.

HULK_I6T · 18-04-2014, 06:20 PM

Quote:

Originally Posted by Big Damo

Or with dementia/Alzheimer's disease in an aged care facility they lock you up in and throw away the key.

Life is about opportunities... some are taken advantage of and some missed.

you seem to always want to take the easy road. I say compete in life and try make the most you can. Not look for the lowest denomenator possible.

turboclown · 18-04-2014, 06:29 PM

Quote:

Originally Posted by f6_benito

Life is about opportunities... some are taken advantage of and some missed.

you seem to always want to take the easy road. I say compete in life and try make the most you can. Not look for the lowest denomenator possible.

How do you know what road he has taken, or what he has been through? Unless you know him outside this forum you are just coming across as a judgemental *****

GASWAGON · 18-04-2014, 07:10 PM

After the last 7 years of appreciaition i am not sure RE will double again in the next 7......Interest rates at lowest records (Can only go back up now), economy not doing so well and Ford/Holden closures coming soon.

I'm just not sure if i would take the risk on a mortgage in these times???

SIRGTP · 18-04-2014, 07:16 PM

I bought my first house at 23... and second at 27... and third a few years ago... Money in the bank...

Yellow_Festiva · 18-04-2014, 08:00 PM

Quote:

Originally Posted by EF_6

After the last 7 years of appreciaition i am not sure RE will double again in the next 7......Interest rates at lowest records (Can only go back up now), economy not doing so well and Ford/Holden closures coming soon.

I'm just not sure if i would take the risk on a mortgage in these times???

May not double but there is always something lurking in the background to help keep things going.

I think the current trend of cashed up foreigners coming here will not stop any time soon. Great of you are selling, real bad if you are trying to buy.

Interest rate movement, policy change to stem overseas buyers and how much more residential land will be released and where is the great unknown.

Tough decision re taking a mortgage, last one I took was 12 months ago for a vacant block in Sydney. Spent 10k getting a DA approved and it has been conservatively valued at 150k above what I paid for it.

GASWAGON · 18-04-2014, 08:14 PM

Quote:

Originally Posted by Yellow_Festiva

May not double but there is always something lurking in the background to help keep things going.

I think the current trend of cashed up foreigners coming here will not stop any time soon. Great of you are selling, real bad if you are trying to buy.

Interest rate movement, policy change to stem overseas buyers and how much more residential land will be released and where is the great unknown.

Tough decision re taking a mortgage, last one I took was 12 months ago for a vacant block in Sydney. Spent 10k getting a DA approved and it has been conservatively valued at 150k above what I paid for it.

150K profit within 12 months....WTF!!!

Yellow_Festiva · 18-04-2014, 08:25 PM

Quote:

Originally Posted by EF_6

150K profit within 12 months....WTF!!!

Profit only if I sell.

I guess with vacat land you have a bit of an edge.

In the surrounding area, the lowest priced block is around 110k over mine, and then the next one after that is 210k over.

Both 30% smaller blocks, both in a suburb that is lower in value than mine.

GASWAGON · 18-04-2014, 08:29 PM

Quote:

Originally Posted by Yellow_Festiva

Profit only if I sell.

I guess with vacat land you have a bit of an edge.

In the surrounding area, the lowest priced block is around 110k over mine, and then the next one after that is 210k over.

Both 30% smaller blocks, both in a suburb that is lower in value than mine.

Gees that alright.....sell now while you still can i say!

Yellow_Festiva · 18-04-2014, 08:38 PM

Quote:

Originally Posted by EF_6

Gees that alright.....sell now while you still can i say!

God NO!!!!!!

Bought land after a year of bloody open houses.

I like it, she hates it... she hates it I like it.... We both sorta like it but it needs to be gutted and freshened up.... we both like it but got sold out from under us... we both could 'tolerate' it but then we will be there for a while and will it still feel like we made the right decision?

Every bloody weekend....

Got the block, location is great, scenery is great, size is great. Was able to design a house that is exactly what I (woops, I meant 'we' of course) wanted and ready to see the private certifier for the CC on Tuesday.

We ain't going anywhere... finally got something to look forward to....

danzvtil · 18-04-2014, 11:44 PM

Each to their own.
I used to have 2 places rented out, its not the cash cow everyone thinks it is.I sold one and moved into the other after a divorce settlement.
In 6 years of having the rentals, there is always money needed to be spent on them to keep things working as intended, and thats with good tenants who arent trashing the place or skipping on rent.My position on the experience is that I would be infront financially if i sunk the funds from maintenance/management and topping up the loans weekly into a bank account gaining interest with none of the associated risk.
My approach now is to pay down my primary place of residence, and buy some toys along the way and live happy.

BHDOGS · 19-04-2014, 12:06 AM

Now that abbot wants to cut services and raise the retirement age and jack up taxes to pay for rich mothers to pop out babys i see longer mortgages being brought in by banks 40 year mortgages seem like no issue when you wont get **** from the gov till your 70 anyway.

Werd. · 19-04-2014, 12:18 AM

Quote:

Originally Posted by ebv8

i was paying $620pw rent for a 3 bed house in Kirrawee NSW as it was the only house with a garage i could get, saved nothing i got the deposit when my grandfather died
bought a 3bd house in Wollongong NSW and now i pay $514pw to the bank and my boss opened up a Wollongong office so its 8km to work now
oh and in 12 months the house value went up $100k after spending $30k on reno's
not bad i think, much better than renting plus im happier now when im in relax mode like sitting on my deck looking out over the valley
oh and i saved some cash since owning a home and bought my GT
my current house would rent out at $480-$520 per week so basically my mortgage is the same as rent and i borrowed 97%

Weird, renting 3bdrm and granny flat in Caringbah for $500/wk. Shop around?
BIG carport.

nstg8a · 19-04-2014, 12:35 AM

The missus and I have just signed the paperwork on some land, and hopefully by January our first (and only, with any luck) house will be ready to move into.

It's easy to see how so many over capitalise when buying a house, especially building. It's so easy to spec up and all of a sudden you've added 100k to the mortgage, and your payments are that much higher.

We set our selves a target of getting it done for 400k, and so far it looks like we are gonna be within 4-5k of that fingers crossed.

Yes it's gonna cost us more than renting, but not a lot more, and the security is what we are really looking forward to. No more inspections, no one telling us we can't put a hook in the wall, no leases etc etc
And even though it's further from work, I go from a million sets of lights to about three, so fuel economy will improve markedly, plus no neighbors uber close sounds good to me.

**Mont5.0** · 19-04-2014, 08:19 AM

400k for house and land is pretty good. I have just built a new house, we couldnt find anything we liked for the coin, after some investigation worked out to be around the same to buy land and build. Ended up with the house we want in a brand new area.

I have almost paid off my existing house (been in it 8 years) and the rent that I receive from it will be paying my new house. Pretty simple formula, living within my means. So in answer to the OP yes I believe rent is dead money.

Being smart with your money is what its all about. Listen to people with properties, you can have what ever you want if you play it smart. Worse case- sell the property (s) if its becoming to much. You should always come out in front or better off than someone else paying them off for you....seems like common sense to me.