I'm an empty nester and recently sold my PPOR in Point Cook (outer west of Melbourne). I decided to rent a flat in Kensington (inner west of Melbourne) to see if I like the lifestyle. I love it, but unfortunately the recent market craziness has almost priced me out of buying in this area.
Based on the research I have done, it seems that I would be better off financially if I continue to live in a rented property in this area and buy more investment properties in other areas instead. I already have a cashflow positive IP in Bendigo and a cashflow neutral IP in Werribee.
However, I'm not sure about the emotional impact of being a long term renter. I think I'll probably worry about things like…What if the landlord sells the property and I get kicked out? What if the rent goes up so high that I cant afford to live here anymore? What if house prices go up so much that I can never get back into the Melbourne market as a homeowner?
All the investors I've talked to tell me to keep renting and buy IPs, but none of them actually do that themselves. They all seem to need the security of owning their own home. I'd love to hear from anybody who is actually walking the talk – by living in a rented property and buying IPs instead.
Hi,
I'm a long time property investor (12IP) and I have been renting for the past 3 years. I'm told that you should rent where you want to live and buy where you want to invest.I live in a beautiful waterfront home that's worth approx $1mil for $535pw. If Ibought this place 3 years ago I would of lost $150K in value and paid the bank approx $60,000pa interest ($180,000). BUT I have paid the landlord $84,000 in rent. I'm about $250K ahead of myself in funds so far.
In the same past 3 years I have purchased, renovated 2 homes and now have them rented. I think it all depends on the timing of the market place. I found this place on the internet and secured it very quickly as I knew the rent was so so cheap. In fact I was doing a search the other day and found a property that was worth $1.4mil for rent at $550pw. Who would want that kind of return????? But the funny thing is that some investors have no problems with there ROI. I take advantage of these dumb investors
I have no problems with renting in this current market. BTW we live on the Gold Coast.
dannyde wrote:Hi,
I'm a long time property investor (12IP) and I have been renting for the past 3 years. I'm told that you should rent where you want to live and buy where you want to invest.I live in a beautiful waterfront home that's worth approx $1mil for $535pw. If Ibought this place 3 years ago I would of lost $150K in value and paid the bank approx $60,000pa interest ($180,000). BUT I have paid the landlord $84,000 in rent. I'm about $250K ahead of myself in funds so far.
In the same past 3 years I have purchased, renovated 2 homes and now have them rented. I think it all depends on the timing of the market place. I found this place on the internet and secured it very quickly as I knew the rent was so so cheap. In fact I was doing a search the other day and found a property that was worth $1.4mil for rent at $550pw. Who would want that kind of return????? But the funny thing is that some investors have no problems with there ROI. I take advantage of these dumb investors
I have no problems with renting in this current market. BTW we live on the Gold Coast.
Hmm maybe they bought for growth not rental return….
Hey thanks dannyde, its wonderful to hear from someone with personal experience of doing this.
May I ask whether you plan to buy your own home at some future point? If so, what factors would affect your decision about whether and when to buy one? Would you plan on selling off some IPs to fund the purchase of your own home?
Good question Africandaisy, my wife has been moaning about not living in our own PPOR. We have 2 kids and another one on the way and she is getting that feeling that we should be settling down in our own home. My oldest child is 3. This is a emotional thing, not financial. We are always at the mercy of a landlord in our current position. But I love it as we both don't have to work.
We are planning to buy in Sydney —- Maroubra or Coogee and may have to sell 2 x IP to buy our PPOR cash. As I am retired, it's been hard to borrow money in this current financial climate.
I have been buying properties for over 22 years and there is one thing I have learned. When somebody says to me "when is a good time to buy property" —- my answer has always been "NOW". Everytime I purchase a property there is always someone who says I should'nt be buying in this current time.
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