Renting better then buying your own home? Really? I purchased my first house when I was 24 years old and never looked back. The advantages of owning your home are plenty. 1. Nobody can ever give you notice. (Piece of mind) 2. Any money spent on the house is to your own advantage and not to the landlord. 3. With basic fiscal discipline (live within your means) you can reduce your bond and always have spare capital available. 4. Nothing is more satisfying then increasing your monthly payments and notice the monthly reduction in interest and subsequent increase in the capital portion of your payment. 5. I paid off my first bond over 6 years and then used the extra cash to invest and believe me, the extra cash is plenty once you donÂ’t have to pay the bank anymore each month. 6. The increase in value over the years is to your advantage and not the landlordÂ’s. Finally, nothing is more satisfying then sleeping under your own roof at night. PS. I did not have car finance! I always bought a second hand car for cheap and with cash!
Yes I agree. It is very satisfying to own a home and so much better if you settle the bond early. I however feel that a primary residence is a living expense and not an income generating asset. I would therefore rather rent my residence where the landlord covers most maintenance expenses etc. If you look hard you can also often rent for less than what the initial interest component of the bond repayment on that property would be, especially if you go into upmarket housing. Here is where discipline plays a major role. The difference you save between the would be bond repayment and rent you pay now has to be used for high demand entry level rental units bought from distressed sellers that allows you to charge rent equal to the bond repayment and levies etc on that property(s). In my opinion following this route you use your equity optimally and leverage the banks money to acquire properties with a total value greater than what you would have been able to if you bought your primary residence. Most or all repayments and costs are covered by tenants and you can still put any excess money you have towards settling those bonds earlier and as equity becomes available in those rental properties you can add additional properties to build and grow your portfolio. At the end of the day you want to maximize your net worth and that's all that matters. Who cares if you own the house you live in or not? You'll probably be able to live in more luxury if you rent and still be better off financially if you structure everything properly. But yet again. That's how I see it and everyone will have a different situation and opinion.
Interesting topic. Valid points from both sides and great point from kwagga about knowing oneself as an investor/saver. I've been on the rental side for the last seven odd years and have now just recently bought my primary residence. I came to the conclusion that rather than maximizing return on capital, I would now pursue a strategy of maximizing utility of capital. ie. find the best use for my capital.
My 2 cents worth. I personally find owning your property the best option. Why rent when you can own, why be a Tenant when you can be the Landlord. Why pay someone else when you could be the Income generator (receiving of "passive income"). I bought my 1st property when I was 22 years old & rented out (leased) a portion of my property (separate entrance) to 2 single ladies for approximately 7 years. During this time I used all of the Rental Income on a 2nd property (Buy to Let property in the very same area that I live in). I then bought a 3rd, 4th & 5th property - each time 1 property subsidising the other & so on. I am now 42 years old & have NOT had 1 single tenant in my Primary Property for the past 13 years. All the Monthly Passive Income from my other properties are simply just great. Do I want to buy more property - NO, now I need to concentrate on building a good Stock Potfolio. My own primary home is "paid up" a long time ago (although I keep the Bond open - Access Bond...just in case of other opportunities that may arise). Also think about when you are Old - what happens if you still renting - do you want to be "kicked around" from pillar to post...NO!! I'd rather want to die peacefully in my own home (peace of mind) - Own my Own home. Good Luck with your decision.