To buy or rent (forever)???

Hi guys,

Just wanted to hear your thoughts and opinions on this subject.

In Rich Dad Poor Dad, Kiyosaki writes about owning your own home as a liability.
I also heard/read from seasoned investors say the traditional way we've been brought up to own your own home first, will actually slow down your investment journey.
And generalising here - the dream home you may want to live in would typically have a low rental yield so it makes more sense to just rent where you want to live for e.g. large mansion in Mosman might have a 1.5 - 2% yield.

I know there definitely are disadvantages to renting - you're at the mercy of the landlord etc...
The idea that "rent money is dead money"...

However, with that being said - does it ever make any financial/logical sense to buy your own home?
Wouldn't it be better to rent... Forever?


Cheers,

Taku

 

Renting can certainly be advantageous, there's a few hundred K of debt that you can utilise towards those 100 properties you want.

Renting can also be a pain in the bum; with inspections, some not allowing pets, some selling properties off etc. I like the security of my own home.

 

Haha @D.T. good call

Did you buy a PPOR before getting into the investing game?
If so, did it hinder you significantly at all?

 

Usually only works if you invest the difference between owning and renting as you can rent where you want to live for cheaper generally than owning. Part of my strategy atm but subject to change.

 

Yes, it meant i couldn't borrow as much as I wanted for IPs. But then I recycled some debt through it, and my serviceability shot up a lot.

 

Why are you changing this strategy @HD_ACE?

 

from the Inspiational Quotes thread. Good to have a very affordable home of your own in a very affordable area.

 

What is called when you have a ppor but your mates are paying it off you? Because thats me

 

Hey @WattleIdo,
Thanks for that. Never heard of Stanley before - what book is that from?
So do you plan to rent forever or at least for many years to come?

 

Horses for courses, renting makes sense to fast track your property investing journey but people's values change and as D.T. says, renting can be a pain. I would love to have my own place to do what I want with, and there is often a satisfaction with that that you can't put a price on.

 

It's from The Millionaire Next Door and also from Stop Acting Rich and Start Living Like a Millionaire.
I'm renting now and have rented a lot of the time. I live in a big Californian bungalow with 6 animals. I recently bought something that sticks to the formula and hope to live in it for a little while. It already feels pretty good.
Then I'll probably move on and probably have to rent again.Not that I 'm any kind of example. I'm a late bloomer trying to do my best in the current conditions.
Out of fear I bought the cheapest and most structurally sound and convenient place I could find in Sydney in 2007 as my first property. A mouldy smelly two bedder in Harris Park. I was quite ashamed at the time but it was a very good move. Somehow I managed to combine timing with location and a loan that wasn't very much more than double my income. I didn't 'know' all this stuff then though.
My only mistake was that I didn't do the same with the second. But will keep going this way now.

 

I would not mind renting even forever if there is some sort of security. For me personally it would be pain to be forced to move potentially every 12 months a so. But as a landlord I quite like the current fixed term lease culture.

 

I once rented a place for 9 years and felt very secure - until they kicked me out!

 

That's great to hear.
If I was going to buy a PPOR right now, the mortgage would far exceed double my annual income - I'm a long way off.
Thanks for sharing your story!

 

Nice one @lightbulbmoment. That's awesome

 

Whenever I've rented I've been much better off financially. The problem for me is finding a decent rental in this area. On paper, the choice between buying a cheapie in the area for 700k plus and then renovating vs paying $500-550 per week rent is an easy one.

 

Everyone's situation is going to differ, but seems renting & investing would be best financially for many, perhaps until you were in a position to buy your PPOR outright and then borrow against it for investment.

 

Good stuff - I like this idea Guest

 

Buying a PPOR that needs work is not a bad method to get started.
You can add value in your spare time by renovating as economically as possible with no land tax or CG tax issues.
It's one way to build equity flexibly and conveniently.
Since you would be living there, there's no real pressure to get the job done to a timeline, so have more time to search out bargains for materials, or you can even get free materials if patient.
A house would be the best option for this to achieve the best gain.

 

Something I hadn't thought of @Ace in the Hole.
Thanks for the feedback.