All Topics / Help Needed! / To rent or to buy

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of 3MR3MR
    Join Date: 2005
    Post Count: 2

    I am new in this website, new in property investment and also new in Australia. I am wonndering if I should buy a new home for our family or rent a flat/house and use our money to invest in properties. I am very much interested in investment but do not have any experience. I do not know where to start and how to start yet. I just read the new book writen by Steve Mcknight which is very encouraging.

    Anyone could give me some good suggestions?[smiling]

    Profile photo of investroninvestron
    Join Date: 2003
    Post Count: 92

    rent money is dead money, it’s not deductable, nor are house repayments, but the house will be yours and will increase in value over time.

    If you have money left over after living exp. and repayments, this will help you to get investments, and you don’t even need that if you find CF+ properties.

    Profile photo of DNADNA
    Join Date: 2004
    Post Count: 6

    hmmm, but the money you need for a deposit on your home could be better put to buying +CF properties could it not?

    DNA’s wife

    Profile photo of woodsmanwoodsman
    Join Date: 2004
    Post Count: 714

    1. Are you happy with your family living in a rented premises instead of owning your own home? This is mroe a lifestyle/philiosphical judgement, which IMO, there is no right or wrong answer.

    2. If you have no objections to renting, then is this premises ie rent costing you less than that premises you would consider purchasing ie loan payments.

    Of course, that does not take into account other expenses eg rates, depreciation, which would also skew the financial analysis towards renting. Nor does renting your own premises through a trust structure which you could also do…..

    3. Are you confident that you want to be investing in property (versus shares or bonds), and more specifically what geographical area of Australia given where we are in the property cycle.

    Profile photo of DerekDerek
    Join Date: 2004
    Post Count: 3,544

    Hi 3MR,

    Investment or home is really a question only you can answer as there are some many variables to consider.

    Successful investors have started at both ends of the spectrum. There are those who bought a house first and then there are those who bought an investment first.

    For example if you were living downtown Sydney it is cheaper to rent a property than it is to buy into the same property. The flip side of this is that you then do not have a place to call ‘home’ – this is obviously very much a family decision.

    [email protected]

    Property Investment Support Available.

    Profile photo of ridiridi
    Join Date: 2004
    Post Count: 24

    personally if I had time again I would buy a more modest home to live in as an expensive home will stunt your growth and you always seem to spend money on it
    OR I would buy a duplex live in half rent the other.
    Robert Kiosaki’s books say that your home is a liability not an asset well not sure whether that is entily true as there is no capital gains on principle place of residence.
    if you are free of comittments have you consided buying (live in it)…fixing ..selling ALSO no capital gains tax ……wish I could do it

    good luck……………..ridi

    Profile photo of Andrew999Andrew999
    Join Date: 2004
    Post Count: 15

    I agree with the general theme of the replies so far – this really has to be your decision and it depends on your lifestyle choices etc. Putting money into your own home is not dead money as it builds equity which can be used later to finance IP’s. However, rent money is dead money from day 1. Having said that you can be better off renting as opposed to buying in low rent areas (as compared to purchase price) such as some areas in Australia (e.g. Perth) if you get the right deal AND you use the rest of your money to invest from day 1. The biggest trap people fall into is say they want to invest, rent a property and then spend the rest and never quite get to investing. At least buying your own place forces you to pay it off (and build equity and hence save). Your own house doesn’t have to cost you lots of money. Just like an IP, if you chose carefully it can be quite cheap to own a home.

    Profile photo of DazzlingDazzling
    Join Date: 2005
    Post Count: 1,150

    Hi 3MR,

    Only you can answer that question….IMHO it will depend very much on exactly what the following entails, which you haven’t detailed;

    “our family” – does this mean wife and one child or 7 kids plus granny ??
    “our money” – does this mean $ 20K or $ 2MM ??

    Given that you say you have no experience and don’t know where to start, I’d recommend you rent until you become more familiar with ‘things’..



    “Go hard or go home”

    Profile photo of gatsbygatsby
    Join Date: 2003
    Post Count: 708

    Hi 3MR,
    I would have to agree with most if not all of the replies already given. Dazzling has raised a good point in that it depends mostly on your financial/family situation. Also you state that you are new to Australia. In that respect I would recommend renting as cheap as possible. If you buy to live in you would want to do the same due diligence in buying as you would if you were buying an investment property. It may take some time to look around for a PPOR if you are hoping to buy right with the aim of maximizing the use of capital growth to purchase another IP. Also, how disciplined are you/your family in sacrificing now for a better time ahead financially? One couple in the book you read sold their home, lived in the mother in laws garage, took out a second mortgage on mother in laws house and used the money to invest! This obviously an extreme example. The point I guess I’m making is how badly do you want to make a decision that’s right for you.

    Profile photo of first choicefirst choice
    Join Date: 2005
    Post Count: 3

    I agree with Woodsman. More info needed to really help you I feel. Are you handy with property? The reason I ask that is that I’m a renovator, and also in business in the building sector. I can often see a good deal when everyone else gives up.
    So, renting would never be a sensible option for someone like me, but in a lot of cases it can be a way to accelerate your progress.
    Stay marinated! first choice

    Ellis Karhunen

    Profile photo of 3MR3MR
    Join Date: 2005
    Post Count: 2

    Hi, Everyone,

    A lot of thanks for your replies and some of yours are good suggestions.

    We have a 4 members in our family, me, my husband and my 2 girls.

    We have some saving about A$100k.

    I have went through some of the advertisements in our city-Melbourne, butfound the houses I am satisfied with are all quite expensive now. I am also wondering what the housing prices will go, up or down? Is it the good time to enter the market now?

    Thanks again

    Profile photo of eesholeeeshole
    Join Date: 2005
    Post Count: 63

    Hi Maggie,

    I’d say you’re doing pretty well if you’ve saved 100k. As for whether the market is going to go up or down, well, that’s the $60,000 question we would all like an answer to. I have read a few articles which suggest that house prices have so far outstripped inflation, wages growth and rental returns such that it is inevitable that the market will go down 20%ish over the next couple of years. I have also seen articles which suggest that population growth will provide the demand to continue the rise in property prices, and we have already suffered a drop, and it’s time for the market to turn the corner and go back up.

    So I guess it’s a matter of assessing all the evidence presented to you and making a call one way or the other. Anyone out there that’s closer to the inside of the industry and can provide some insight?



    Profile photo of DDDD
    Join Date: 2004
    Post Count: 508

    My wife and I totally agree, that should we start again with our current knowledge we would rent for 5 years while squeezing the life out of the cash we had to build a property portfolio.

    Decisions like this are yours alone as others have said but if a previous example had been taken a bit further a Sydney 3 bedroom inner city unit costing $800k currently rents for $460/wk. Should you buy the one next door for the same your mortgage would be $4600 apprximately a month. Based on that , to own there is madness but to live there is a choice.

    Your servicability is drained substantially by buying these types of properties unless its for investment and where you have a really rude income you are trying to offset a mass of tax on.

    Rent young man, and take the extra $700+/wk to the investment servicability table and buy more. And investment interest is all deductable so win win win.

    Good Luck.


    PS146 Certified Financial Planner
    Don’t sweat the small stuff,and it’s all small stuff!!

Viewing 13 posts - 1 through 13 (of 13 total)

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