Do you rent or own?

[chich]

Originally Posted by King Nothing

Your home, that is. I'm starting to look at my options for moving out of home and would like to see what everyone on here does. Between my and my g/f we earn around $100k (first year graduates) and have just shy of $40k saved up. Now we are trying to decide whether it is better to rent or to buy.

If we decide to buy, we would probably stay at home for another couple of years and save around $100k as a deposit for a place for something under $500k. We would most likely struggle for a few years and definatly not have enough money to start a family, let alone afford the time off work she would need. But in the long term we may be better off as we would have our own place.

On the other hand, if we decide to rent we will move out within the next 12 months or so, and have saved hopefullly around $50-70k. We would then rent for a few years whilst the money we save from the difference would be invested, and hopefully save around $150-200k over a few years. We would then be in a better position to buy a house with better salaries and more financial security. The disadvantage here though is the dead rent money. And the way the rental prices are going in Sydney at the moment is insane, it may even get to the stage where we would be better off with a mortgage!

So, what do you do? Whats your experiences and maybe even some advice? Oh and the poll should be anonymus, I ticked that box

My suggestion would be to talk to your financial adviser and/or accountant. Thanks to the beauty of negative gearing, it might make sense for you to buy a house as an investment and rent.

[blueoval]

Originally Posted by chich

My suggestion would be to talk to your financial adviser and/or accountant. Thanks to the beauty of negative gearing, it might make sense for you to buy a house as an investment and rent.

Agreed. Take advantage of the options while your still at home.

[XR06T]

re interest rate rises.

just did the sums for me, and a 1/4% rise on a 320k mortgage is $15/week fyi.

not a major dent in anyones budget i would have thought!

[Bucket]

Originally Posted by XR06T

re interest rate rises.

just did the sums for me, and a 1/4% rise on a 320k mortgage is $15/week fyi.

not a major dent in anyones budget i would have thought!

60 Bucks a month is a Tank of fuel...if you drive a Focus

But yea...it isnt that much in the scheme of things

But having said that, 1% over the last two or three years is $240 a month.

[blueoval]

Originally Posted by Bucket

60 Bucks a month is a Tank of fuel...if you drive a Focus

But yea...it isnt that much in the scheme of things

But having said that, 1% over the last two or three years is $240 a month.

I guess I wouldnt care about the interest rate hike, IF my wages went up in the same fashion to compensate.

[King Nothing]

Well after a bit of a think about things I've decided to have a look at buying something around $200-250k. All this I will need to confirm with a financial planner but my own sums say that I could do it.

I want to get something that we can pay off with one wage in a worst case scenario in case one of us loses our job for whatever reason. But ideally we will pay more together and aim to have it paid off in a few years.

Im thinking of buying it and moving in for 6 months to take advantage of first home owners grant which would be in the region of $12-14k depending on the savings in stamp duty. I would then rent it out after 6 months and put the rent towards the mortgage repayments. Come 2 years from then, we could either move into it, or get another loan and buy another house, keeping the original as an investment property. Im not 100% of how much we would need to borrow or how much we can afford, I havent had time to do the maths on that. We will do it tough for those first couple of years I imagine. Hopefully we could be around 26-27 when things start to look better.

But the alternative is to rent and buy years later (if we can even afford to!) which IMO is a waste of money. Or we could stay home for a couple of years, save and get something bigger to begin with. Only problem there is our repayments will eat up my salary (current earnings anyway), and bills food etc will be covered by my g/f salary. But we couldnt afford to start a family until we are late 20s at best. Let alone buying stuff for the house!

Anyway plan now is to go talk to a financial planner and see what they have to say. And now that the mods are done (save $150 for painting a spoiler) my real savings can begin!

[Matt_971]

ok I am going against the revolution here atm.

We are in a mortgage atm. Paying about 1200 a month. MIGHT be moving to melb very soon and the way i look at it is I will be on wage drop when i move (appreticeship) and not sure what the missus will do just yet. But I will be renting for the entire time i down there i think. Reason why is for short term I dont see benfit of owning a house.

We have been in current house 2yrs so far. Had a good run with only heater breaking down but add up land rates, water rates etc whereas we would be paying a lot less to rent and not paying rates etc.

Then after apprenticeship finishes I could end up anywhere and dont want a hosue i have to try sell (maybe when market is AWESOME or who knows in 4yrs time) before we can move on.

If I stay in melb or get offered full time in melb on apprenticeship then I would prolly buy a house toward end.

Just my input. Depending on how long u wanna stay. I would prolly rent for lil longer, save more of deposit and buy when ya got a decent lump. If interest rates go up the less u gotta pay back the better off you will be.


ALSO what is a BROKER (not the bank but a decent broker) telling you can borrow. They told us we could lend up to 250,000. We both in country vic and wages not great here. NO WAY we could pay that back and still have any sort of life. Food would be halved no out life etc. Just look at what ya can do. Maybe try putting the money u will on a loan into another account for a while n see what money u have left etc etc.

[superpursuit83]

I may be a lone sheep too, I was once happily married, mortgage and big repayements. Working all the time..... Then BAM! DIVORCE. Lose the lot, house, car etc. Left Kalgoorlie with a $500 Mitsubishi and my white Shepard. Arrived in perth and got bored so started another business. I have 7 cranes at $300,000 average. And only have 2 left to pay for and never had an overdraft. Other companies offering good money to buy me out. And driving the best aussie cars I can buy.

Guess what, I do not own a house and still rent at $300 per week. I think the house prices have put me off, but I am happy and anything that breaks is fixed by others. I don't know if I would ever move into another rental, but at the moment my life is good and plenty of disposable income.

Its all about where your at in life. My super is my bussiness, and buying a house is like mah whatever at the moment.

[Deadman]

Originally Posted by King Nothing

Im thinking of buying it and moving in for 6 months to take advantage of first home owners grant which would be in the region of $12-14k depending on the savings in stamp duty. I would then rent it out after 6 months and put the rent towards the mortgage repayments. Come 2 years from then, we could either move into it, or get another loan and buy another house, keeping the original as an investment property.

If you use the first home owners grant you need to live there for 12 months AFAIK.

[loxxr6]

Im thinking of buying it and moving in for 6 months to take advantage of first home owners grant which would be in the region of $12-14k depending on the savings in stamp duty. I would then rent it out after 6 months and put the rent towards the mortgage repayments. Come 2 years from then, we could either move into it, or get another loan and buy another house, keeping the original as an investment property.

Sounds like a good idea. Gets you in the market too.

[Unco]

Originally Posted by King Nothing

Well after a bit of a think about things I've decided to have a look at buying something around $200-250k. All this I will need to confirm with a financial planner but my own sums say that I could do it.

I want to get something that we can pay off with one wage in a worst case scenario in case one of us loses our job for whatever reason. But ideally we will pay more together and aim to have it paid off in a few years.

don't forget however that there are additional expenses apart from the mortgage repayments themselves: phone, electricity, water, council rates, body corporate fees, it all adds up.

sounds good mate. you're obviously serious about it and i think a $200-250K mortgage should be relatively easy to manage on a combined income.

Originally Posted by Matt_971

ALSO what is a BROKER (not the bank but a decent broker) telling you can borrow. They told us we could lend up to 250,000. We both in country vic and wages not great here. NO WAY we could pay that back and still have any sort of life. Food would be halved no out life etc. Just look at what ya can do. Maybe try putting the money u will on a loan into another account for a while n see what money u have left etc etc.

IMO, brokers are good when you really want to get into real estate but the banks aren't interested if you go in person. i got my first house with no savings history behind me. yeah, i struggled to meet the mortgage payments for a couple of years, but looking back now it was all worth it.

Originally Posted by superpursuit83

I may be a lone sheep too, I was once happily married, mortgage and big repayements. Working all the time..... Then BAM! DIVORCE. Lose the lot, house, car etc. Left Kalgoorlie with a $500 Mitsubishi and my white Shepard. Arrived in perth and got bored so started another business. I have 7 cranes at $300,000 average. And only have 2 left to pay for and never had an overdraft. Other companies offering good money to buy me out. And driving the best aussie cars I can buy.

Guess what, I do not own a house and still rent at $300 per week. I think the house prices have put me off, but I am happy and anything that breaks is fixed by others. I don't know if I would ever move into another rental, but at the moment my life is good and plenty of disposable income.

Its all about where your at in life. My super is my bussiness, and buying a house is like mah whatever at the moment.

one of the main reasons to get into real estate is to get some sort of financial security. in your case, you've chosen to achieve that through a business. it comes back to each individual's risk profile. real estate is generally perceived as being a safe (long term) investment and it requires little knowledge, plus a lot of people see their homes as a symbol of 'settling down'.

[superpursuit83]

Agreed, one of the main reasons was for not buying investment property was the current commercial climate in Perth. Cranes are paid for in 5 years and earn 20k a month. Resale is great at the moment and works for me. But every one is different and each person must look at there own sustainability.

[asusdragon]

Originally Posted by Matt_971

Just my input. Depending on how long u wanna stay. I would prolly rent for lil longer, save more of deposit and buy when ya got a decent lump. If interest rates go up the less u gotta pay back the better off you will be.

yeah but in the time you keeping renting house prices will go up too. so not sure if they would work out at well, hey if you buy a house now then over the years the repayments will get easier because your week pay should go up but the house repayment shouldnt (unless interest rate rise)
but say you waiting for anohter 1yr house rpices might go up say another i think it is 10% in most states now

[Matt_971]

Unco: Yeah banks are not interested unless you are first YOUNG home owners and then they seem to wanna lend you AS MUCH AS POSSIBLE. So much there is no way you could pay it back. Thats where our broker come in good. He gave us the loans and said I would only loan .....

Only reason I wont be looking at buying is I dunno what the missus will be doing for a job yet. And I dont know if I will be staying in melb. Could end up north after could end up overseas.

May be quite happy to sit where i am too who knows hey

Dont get me wrong when we were both employeed it was the best thing we ever done. BUY OUR OWN HOUSE. Can do whatever ya want however ya want. Repaint, change, hang on the walls. But then I lost me job n we are surviving but barely.

I guess buying now if you like the area and going to stay ya couldnt go wrong. Specially with way prices are going in capitol cities. Up in the country most places are going up like Echuca has sky rocketed but I think we were just a year to late. Ahh well.

We will never loose money but wont be making a HUGE amount out of it.

[King Nothing]

Originally Posted by Deadman

If you use the first home owners grant you need to live there for 12 months AFAIK.

Nah, in NSW its six months, top of page 2

http://www.osr.nsw.gov.au/pls/portal...er/fs_fhb1.pdf

Originally Posted by OSR NSW Treasury

At least one applicant will occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of settlement or construction of the home

[phillyc]

Originally Posted by robjh80

What I'm trying to say is 2 things, firstly "cut your cloth accordingly", in other words buy what you can afford when first starting out, dont jump into big mortgages to get the house you want 3 rungs up the ladder right from the off, buy the property that is on the 1st rung on the ladder, get some equity in that property first and then look at upgrading when the time is right, whether your on the 1st, 3rd or even the 10th rung up the ladder, one things for certain......given time your property will appreciate in value and hence your equity and personal wealth will grow with it, it's the easiest money you will ever earn.

Unfortunately young people starting out today also appear to have this "must have it now" mentality, 2 new cars, mobile phones, credit cards, jewellery, flash clothing, fancy furniture, plasma TV's etc etc.
If you want the security for your families future then you will, when starting out have to make some sacrificies.........unfortunately that's just how it is.

I made the decision to go without the fancy cars and all the other trappings etc some 20 years ago while many others I know did not.
I am now sitting very comfortably in my own home, my wife stays home with the kids, we go without nothing on my single income and there are 2 brand new cars sitting in the garage, whereas others that didn't take the plunge those 20 years ago and did waste their money on all the "goodies" are now trapped in the rental market and have a couple of old "bangers" on the front lawn to show for it.

Do it, BUY.........but not just yet.

Some very sound advice there Rob.

I purchased my house and moved in the week before my 22nd birthday. It was a very basic old home (still is) on a nice block, quite small (12squares) and near the train line. The mortgage payments were 40% of my gross.

That was 8 years ago, the price has gone up 200k.

My friends that bought have done really well and are now reasonably comfortable, those that haven't are finding things harder and harder :(

I didn't spend my money on the "essential" world trip, electrical goods or brand new cars. Many people these days do and think, now why can't i afford to buy a house?

Most people these days want the very best 42sq dream house or luxury apartment straight away. Forgetting that there is actually a "property ladder" and you can't start at the top rung.

In a few months we will be starting the building of 3 terraces on the block. Again, this involves paying alot of our income and making sacrifices, but long term it will be all worth it. Maybe then, I can have that o/seas trip!

My own advice is:
BUY as soon as you can afford,
START on the property ladder,
RENT the property out in the short term if need be,
REPAY DEBT as much as possible as quickly as possible,
BUDGET some money aside for having fun.
NEVER SELL as you can use your equity to buy again.

About 5 years in, your mortgage will be similar to what rents are and from here on in your ahead and things will become easier.

Good luck!

PS A fellow at my work, was saying how he paid $60k 25years ago for a place a few blocks from the street and his friends thought he was crazy. Recently the houses in his street have been going for $1.5M

[ebxr8240]

I own and rent...

[Thornie]

Originally Posted by ebxr8240

I own and rent...

same, i own my house in my home town but moved to QLD to work

[ebxr8240]

I bought an investment around 94 for $118k about 4 years back I refinanced and bought another....The rent pays most the mortgage and I get a nice cheque back from tax man this time of year...

[rodderz]

Some suburbs house prices are just ludicrous at the moment- example, in nth suburbs of Melbourne such as Bundoora, Mill Park, Reservoir are selling for 20% more than expected. The real estate guys reckon it's the influx of immigrants with plenty of money from overseas investments and high superannuation payouts there.

Next year there should be a dropoff and a recession- if you believe the experts and house prices may drop and become a buyers market again

[goXF]

I am single, living at home at the moment but am saving up for a deposit on a house and hope to buy something basic next year sometime.
At the moment I am paying $120 a week to help my parents with rent, food, bills etc.
My budget will be no more than $200,000.

[Romulus]

http://seven.com.au/sunrise/moreinfo_071009_renting

Interesting article and has merit here in WA. It's something I'm doing with my money (investing a set portion everyweek).

Personally, I'm waiting for interest rates to increase a couple more percent (which will probably happen irregardless of which party wins) before buying. As cruel as it sounds I believe we'll be able to pick up a fire sale from some poor bugger who's defaulted on their mortgage due to over commitment.

[normxb]

We are buying , but rented for many years

It's only an Old place in a country town , but "well" within our income . We purchased it for $51,000 11 yrs ago , paid bigger payments for equity , extended the loan and put on a $22,000 extention on the side (extra B/room , sitting room , new Laundry and extended the kitchen , 10ft wide x 42 ft long ) had it valued for insurance 6 months ago , it's now valued at $194,000 (house only) on 1104sq mtr block . We could sell for $230-250,000 .

IF you buy , it's "nice" to have all new furniture , but don't , this is where a lot of people go wrong , there's plenty of Good S/hand furniture out there at a fraction of the cost . Get that first & replace it gradually .

Same as work , you can't start at the "top" , better to start with something affordable and work your way up , you don't want to lose the lot .

just from my exprience .

Norm

[normxb]

Forgot to mention , just before the last housing boom roughly 3 yrs ago , we bought an "old dump" on a 1/4 acre block 2 blocks from the main street in the January for $37,500 (like I said , a dump) by July we had an Agent banging on the door , he had a quick sale for it for $80,000 .

Now the block "only" is worth $95,000 , would probably get $105 - 110,000 for it now .

Norm

[blueoval]

I agree Norm, most people out there who buy are in the 'new house owner' mode, and they get carried away with brand new furniture, new appliances amongst other things, just to keep up with the jones', and they do this with rip off finance companies like GE Money, AVCO and other quick lending institutions. Very big mistake IMHO.

As mentioned, start off simple with simple cheap or second hand furnishings, and then over the years when you've gotten over the first few years of home ownership, look into upgrading stuff bit by bit.

[Bax]

Renting, can't afford anything else. Would love to buy but the gf works part time- studies full time, she can't contribute much. And I've only got 1 friend here that would be reliable to live with, and he doesn't want to move out.

[T-BOOST]

We bought a house nearly 5 years ago now, after getting sick of the rentals we were staying in kept selling. (4 houses in as many years)
We opted for the renovators dream, an old 2 story beach house type.
Never been touched in the last 40 odd years exept for the heating. but it had alot going for it.
4 bed, 2 living room 1 with a bricked wet bar, Large in-ground pool, ducted heating, 2 open fire places, 2 balconies one front one back, double carport and single garage on a large block.
We payed 240k 5 years ago and with half the renos done (40k) we have had it valued at 400k

If anyone can afford to buy DO IT! you wont be sorry.

[YOOT]

I was renting. I got Married in Feb and sold my beautiful XR6 Turbo as well :( and we have been renting up untill now.

I am fortunate enough to have earned over $75K a year since I left uni at 21. I am now a director of a small business with a $100K salary and 11% profit share. My wife No longer has to work as we income split to save tax.

I have just purchased our first hom ein Brisbane for $410K with no deposit, and it is much eaier than I thought. I took the 0% depoit option because house prices are going to be going up as much as 40% on the next three years. I will be better off buying now and making $150K in value then waiting a year of two to save a deposit only to pay $100K more for the same house.

I now live 1 min down the road from my office, and have a pool and a/c for summer!

Oh and I replaced my XR6 Turbo with an XT Forester (whish I gave to my wife to drive). :

[Neoxr6]

My partner and i bought at the end of last year, got the worst house in the street, with a bit of hard work it doesnt look to bad now, best thing i ever did. We have used credit companies such as GE finance, all you have to do is use the interest free and make sure you can pay it out but it runs out. i havent had to pay any excess interest. If you can afford it buy i wouldn't waste my money renting. the saying goes rent money is dead money

[Dazza XLT]

Originally Posted by Darran

I have a good income/deposit, and won't have a problem servicing the loan on my own.
My better half will begin teaching in 2 years, so our income will basically double.
I figure if we can easily afford the repayments on my wage, we might as well get into it now!

Once the second income comes on line, slam most of it into the first house. Get the first house paid off, and start on a second. And so on.

Well since this first post, I have had a bit of a re-think.
The missus finishes Uni in 2010. By that time, my deposit would have increased in value by 20-30%.
So we're going to sit it out. See what happens once the missus starts teaching.

As I told her, I'd rather wait until we can easily afford it, then build a small house and over-commit ourselves for the next 3 years.
I'll rent, and put coin away at the same time.

Cheers

Darran