All Topics / Help Needed! / To Rent or to Buy?

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  • Profile photo of mitmmitm
    Member
    @mitm
    Join Date: 2005
    Post Count: 28

    Is buying your own house (Home) an asset purchase or liabilty?
    If one spent the same amount as ones mortgage repayments on rent, theoritcally, one would rent a nicier house, or taken further, rent a similar house cheaper.
    Also, ones 20% deposit/equity (which could never otherwise be accessed) could be invested into IP’s.
    Any thoughts?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes renting instead of buying to live in can be a good idea. Renting a place can be around 50% cheaper than paying a mortgage on the same place. And then there are the repairs, rates, insruances etc which you do not have to worry about.

    But just make sure you do not waste the money you are saving, otherwise you will be worse off in the long run.

    Terryw
    Discover Home Loans
    North Sydney
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    Profile photo of Peter GablePeter Gable
    Member
    @peter-gable
    Join Date: 2004
    Post Count: 6

    If you have ever read Robert T. Kiyosaki’s “Rich Dad Poor Dad” he says that your own home is a liability as it does not produce positive cashflow. I would recommend this book as a good read for anyone thinking about their money and how it is spent on assets or liabilities.

    Profile photo of Kiwi-FullaKiwi-Fulla
    Member
    @kiwi-fulla
    Join Date: 2002
    Post Count: 371

    Paying off your own property is a loability as it is taking money out of your pocket….. however when you sell it you will turning it into an asset as long as the nett ammount you have paid (repayments, rates, insurance, repairs and renovations etc) do not exceed the return from the sales price.

    The other thing to condiser is the banks will only allow you upto 95% LVR to lend against another property …. so if you find hte perfect deal then you may possibly lose it if you have to wait to sell your house first because the banks will not come to the party.
    Food for thought anyhow……
    Cheers
    Kiwi

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    Profile photo of pfsfinancepfsfinance
    Member
    @pfsfinance
    Join Date: 2004
    Post Count: 171

    After many years of research, these days I actually rent as I find I am financially better off by doing this. The property I have been renting for the past 18 months, would cost me approx $1,050- per week if I was buying this property and that’s interest only. I am only paying $410- per week in rent, so I’m saving $640- a week plus all the normal expenses you normally have with owning a property.

    You have to be very careful though and make sure you are investing the funds that you are saving by renting as it is easy to blow the money if you don’t have a plan and goals set for the future.

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    0425 358 293

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    Profile photo of BofclarkBofclark
    Participant
    @bofclark
    Join Date: 2005
    Post Count: 31

    I have to agree with notabrokeranymore. So long as you invest the money you are saving I think renting is a smarter idea.

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