Do Most Investors Rent?

Discussion in 'Investment Strategy' started by magma, 12th Apr, 2016.

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  1. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Absolutely. It is the purpose of the loan that determines if the interest is deductible, not what secures it. Please speak to your accountant or qualified tax professional prior to making any tax based decisions to ensure your full situation is taken into account.
     
  2. Timwest

    Timwest Well-Known Member

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  3. Casteller

    Casteller Well-Known Member

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    Almost always rented and invested in property elsewhere. Has enabled me to live in much better areas than otherwise (eg beachfront or close several locations in Sydney). In Switzerland rented for about 1.5 % of the value with lake and mountain views.
    Could be a problem in Australia though where renters don't have many rights in security of tenure and can be kicked out easily, so still have a house there for one day.
     
  4. joel

    joel Well-Known Member

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    Growth is too consistent and optimistic, as is being able to buy under market value by 10% each time. Anyone can buy six properties in 5 years though.. but they'd be leveraged up to their eyeballs. If you suffer a loss of income or if values go down youll be totally boned, but at least the kind folks at Rethink Investing will get paid
     
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  5. legallyblonde

    legallyblonde Well-Known Member

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    That is what I was thinking.. 10% under market value, 6% rent and 7% growth is VERY optimistic!
     
  6. House

    House Well-Known Member

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  7. Luke T

    Luke T Well-Known Member

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    Totally a great way to get ahead alot faster!
    I have always rented while investing (over 20 years).
    I found you can often rent where you want to live for a fraction of what it would cost to buy the place (and thats interest only),
    example :One of the properties we lived in was a cottage on acreage for 20% of the cost it would have been for me to buy it.
    -Especially for young people who can live at their parents place -This is a BIG help in getting a young person started with a few properties while young ! As rent(housing to live)is usually the biggest cost in life .

    It becomes a little different when you get older and have a wife and family as the emotions come in and you want to put down your roots.
     
  8. RumpledElf

    RumpledElf Well-Known Member

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    I rent and seem to be developing a snowballing IP habit (aiming to get another late this year). I can't afford to buy even vaguely close to where I want to live. Hell, I can barely afford to rent there. And I like gardens, so I'm going to compromise and rent a small apartment for the week and have a house with a large garden in the country for the weekend - that I OWN so I don't have to constantly move that collection of tools around.

    I've moved 5 times since I moved to Sydney 3 years ago and moving is getting old. I quite like the rental I'm in now. The worst thing about moving often is not being able to predict your gas/electricity bills as usage varies hugely between houses, and I like making budgets and stuff.
     
  9. D&J

    D&J Well-Known Member

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    I can and have bought where I want to live but my wife and I are rentvestor's! In fact my 1st IP is a few streets away from where we rent! Our rent is about 75% of the amount of rental income I receive (before considering deductions etc) :)

    We're only recently married and with no kids so have slowly stepped up the type of place we rent as we get older and our lives progress.

    Currently have 6 IP's between us yet are happy to rent going forward. We have acknowledged that our next move will be when we have kids and will want a nicer bigger more expensive place.

    It will be much cheaper to rent than to buy (even though we could afford to buy) so will do that and then put the $$ difference towards further investments and growing our wealth. When it is time to move, we will take out time to (hopefully) find a landlord who is an investor with no plans of moving in, selling etc. to try and mitigate disruptions.
     
  10. D&J

    D&J Well-Known Member

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    Andrew, what's the agreement here from a cost perspective? Do you incur 100% of the expense?
     
  11. magma

    magma Active Member

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    I wish there was an easy way to get in contact with the owner of the property and make a long term deal with them... or even "swap apartments" for the sole purpose of rentvesting.
     
  12. Magnet

    Magnet Well-Known Member

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    My brother in law once told me about a property seminar he went to where they suggested teaming up with friends and buying 2 like properties and renting from each other. Nice idea provided it goes well for both parties and doesn't wreck the friendship.
     
  13. magma

    magma Active Member

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    I wonder if there's any law that might trip this idea.
     
  14. Magnet

    Magnet Well-Known Member

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    There may be now but at the time there wasn't. Brother in law is an accountant so not into 'creative' accounting. He said at the time it was an interesting concept and clear loophole. It was about 10 or so years ago now.
     
  15. Magnet

    Magnet Well-Known Member

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  16. Plutus

    Plutus Well-Known Member

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    not an accountant, but as long as both parties are paying market rate... If both parties are paying $1 in rent/week, yeah that's going to raise flags.
     
  17. mouseburger

    mouseburger Well-Known Member

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    Bought my PPOR first with a plan to do it up and rent it out or use the equity for IP #1. Agree renting is cheaper but I could afford to buy where I live and happy to pay a bit more for being able to do up the house at my leisure and not have inspections. Plus in my case, the rent for a similar dwelling that's equivalent of the weekly cost of my PPOR (including P&I payments & levies; excluding purchase costs) is usually in a less desirable location, or an older place with maintenance issues that may or may not be fixed, or a newer place in a high rise dog box.
     
  18. Magnet

    Magnet Well-Known Member

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    I think the idea was to pay each other's interest only mortgage repayments, so basically market rent. I think the biggest risk is from having a falling out with the investment friends and things going pear shaped as a result.
     
  19. Yann

    Yann Well-Known Member

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    +1 rentvestor, did the numbers and it helps buying much quicker. Not excluding buying PPOR with the intent of a big reno for CGT exclusion, but will be hard not to get emotional and over capitalise. Moving slow anyway with the recent and upcoming family additions
     
  20. Plutus

    Plutus Well-Known Member

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    I would have a gamble on doing it with family but I wouldn't ever try it with a non-blood relative. Good way to ruin a friendship.. Good way to ruin a family relationship too, but I think they would have more chance of getting over whatever the issue is.