Is it possible to buy cheaper than renting?

Discussion in 'What to buy' started by Alex123711, 1st Mar, 2019.

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  1. Cimbom

    Cimbom Well-Known Member

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    I would say Canberra is probably the main exception where it is cheaper to buy than rent in major cities - e.g. our house, the monthly repayments are ~$2100 and the weekly rent would be about $530-550/week.
     
    Last edited: 5th Mar, 2019
  2. Marg4000

    Marg4000 Well-Known Member

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    Comparing mortgage payments with rent charged is misleading.

    First, you needed a decent deposit to get the mortgage, and obviously the higher the deposit the lower the monthly payments. Unless, of course, you were able to borrow 100%, difficult these days.

    Then, as well as mortgage payments, you have to pay rates and building insurance, plus maintenance costs, none of which apply to a tenant.
    Marg
     
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  3. Cimbom

    Cimbom Well-Known Member

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    Of course but even to be that close to the price point is pretty rare in most major cities in Australia
     
  4. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Actually @Marg4000 you do raise a good point. For renters, there is no risk (this is on the landlord), but there is no upside either.

    The land lord has all of the risk, but all of the upside.

    And this is how there is balance in the Force.
     
  5. skater

    skater Well-Known Member

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    Is it possible to buy cheaper than renting? Sure it is, but you may not like the locations.
     
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  6. Cimbom

    Cimbom Well-Known Member

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    Skater, my example is pretty true across the board in Canberra, even in the popular suburbs. I'm guessing it's due to the higher average income and higher employment rate here but who knows.

    As a comparison, the apartment we were renting in Sydney was worth about 900k (from comparable sale in same building) but we were paying $525/week in rent. Massive difference compared to our PPOR example.
     
  7. gach2

    gach2 Well-Known Member

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    I know my property in logan is cheaper than renting
    depending how cheap you get interest rates
    could be $100 cheaper including expenses

    after pm fees higher (i/o) interest and landlord insurance and maintence still around $30 positive on purchase price + stamp and legal costs, though a bit more since my loans only 80%
     
  8. skater

    skater Well-Known Member

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    Ah....but I was referring to some that have a 10%+ yield on purchase price. They are out there.......
     
  9. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    There is a slight discount to Canberra property as well, because it is all Crown Land. Leasehold title doesn't have the same appeal as freehold title, but this doesn't affect rent prices.
     
  10. Rugrat

    Rugrat Well-Known Member

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    Where on earth are people finding positively geared properties in Canberra??
    Unless they are all units? (I have to admit to not bothering to look at units, but they are genuinely positively geared at purchase, then I might need to rethink my mindset on that).

    The mortgage repayments on the purchase price alone tends to be higher then the current rents, and when you factor in rates, land tax, insurance, and pm fees, etc; they are all well in to negatively geared territory.
    Maybe if you have a massive deposit, so your mortgage is much lower??

    Sure, after a few years, especially with rental prices increasing as they are, they might become cheaper to pay the mortgage then to it would be to rent the same place. That's what happened with our last investment property in Canberra. But you are still paying more for the mortgage then the rent in those initial few years.
     
  11. lynchy

    lynchy Well-Known Member

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    My interest payment is $2,960 per month and I received a rental offer of $850 per week / $3,400 per month when it was being considered for rental. This is a 3 bed unit in Dee Why

    When you include Strata, Rates and PM Fees it sits slightly behind
     
  12. Archaon

    Archaon Well-Known Member

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    There are alot of nuances with rentvesting, I believe you are refering to like for like, as in, buy a house and rent one similar to take advantage of the landlord tax benefits on your property?

    My take on it is, I don't need to live in a 3bdrm house though others might and i would rather build/rent out a 3-4bdrm home and live in a 1-2 bedroom unit/GF/etc minimalist in a way.

    The difference in rent of say ~$400 for 3/4bdrm to ~$200 GF, with repayments of $450 a week, i'm $200 better off by letting someone rent my house, as well as the Tax deductions that go along with it.
     
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  13. Cmelderis

    Cmelderis Well-Known Member

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    Dee Why?
     
  14. House

    House Well-Known Member

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    Classier, Freshwater!
     
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  15. Alex123711

    Alex123711 Well-Known Member

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    Is it possible to buy and rent out rooms seperately and be better off than renting that way? Is anyone here doing this?
     
  16. thatbum

    thatbum Well-Known Member

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    Then the fair comparison would be to rent a whole place and rent out the rooms separately yourself.

    I'd imagine there's even less chance that buying would be financially better.
     
  17. Alex123711

    Alex123711 Well-Known Member

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    That's a good point.
     
  18. Omnidragon

    Omnidragon Well-Known Member

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    Pretty hard that’s why when Labor gets in we’re in trouble
     
  19. Todd

    Todd Well-Known Member

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    There are some examples of units in the ACT where it is cheaper to buy than rent.
    Buy this 1 bedroom unit for 300k in Franklin (plus stamp of only $3,900 and legals of $1500)- total of 305,400 purchase price.
    https://www.domain.com.au/22-75-elizabeth-jolley-crescent-franklin-act-2913-201401355

    If you rent a 1 bed unit in same building you pay $360 week or $18,720pa
    53/75 Elizabeth Jolley CRES, Franklin ACT 2913 - Apartment For Rent - $360 | Domain

    Expenses as owner are:
    If you pay IO at 4.5% = $13,743
    BC - approx $2,800
    Rates - $1800
    Total - $18,343
    Not by much but it's cheaper to buy by $400 pa approximately and you have your own place, no inspections or leases to sign and you can't get evicted. On the light rail line as well