I can pay off my house in 4 years pretty much on poor blokes wage!

[BENT_8]

Originally Posted by ebxr8240

My issue with renting is what's the go when you can't work anymore ??
May be ok when you're young but it catches up at the other end !!

What makes you think a renter doesn't save for the future?

If I was to buy the house im living in it would cost me $350k. To mortgage it over 30yrs would cost me around $750k with fortnightly payments of $950.
Then factor in land rates, building insurance, emergency services levy, maintenance etc. etc.

If I rent at the current rate of $580pf/n it would cost me $450k.
Obviously rent will follow inflation to a certain degree so figures can vary, so too can interest rates on mortgages.
The difference being I don't have to cover none of the extras associated with owning, I can up and move at anytime for little expense. The downside, I wont have a freehold asset at the end.
Given!

But the $300k ive saved over 30yrs by renting buys me another 25yrs give or take, or with the kids moved out I could buy a unit.

Im 37 now, 55 years of renting will make me 92, I'll take that gamble at the minute.
At 92 it wouldn't matter what im worth, and I'd like to think my kids wouldn't need anything I would leave.
To be honest, the thought of buying a coaster bus and ****in off around Aus doing seasonal work when the kids leave is seriously enticing (refer to previous Gypsy comment).

But that's what is good about Australia, everyone has options and can choose what is important to them.
It doesn't matter whos wrong or right in their personal choice and opinions are like *********.

At least if I rent for 30yrs an Aussie family can get a cut of the profits, if I pay interest the fat banks win.

[ebxr8240]

The problem lies both ways with employment,,
The pension age is getting older..
You'' have issues getting work or keeping a job from 55 if you lose it..
Hopefully if you bought a house in that time its paid off..
The pension hardly covers rental..
There no guarantee there's a place to rent also? Landlords sell etc..
Another you SURE you've SAVED or would have saved $300k ??
Its money not spent, not put away..
Yes mate have motorhome.. Get into ASAP !!!

[BENT_8]

Originally Posted by ebxr8240

The problem lies both ways with employment,,
The pension age is getting older..
You'' have issues getting work or keeping a job from 55 if you lose it..
Hopefully if you bought a house in that time its paid off..
The pension hardly covers rental..
There no guarantee there's a place to rent also? Landlords sell etc..
Another you SURE you've SAVED or would have saved $300k ??
Its money not spent, not put away..
Yes mate have motorhome.. Get into ASAP !!!

All valid points, which brings us to discipline.
Paying off a mortgage takes disciplined, the better disciplined the quicker its payed off.
So too with savings, with discipline it can be done and done effectively.
Its about living within your means.

Im lucky that I started with a descent initial deposit, courtesy of the profits I made from owning.
Over the years we have continued to contribute every month as though we were paying a mortgage.
The money doesn't get touched, but could if necessary at a fee.
The plan has always been to provide a deposit for each of our 4 children when they make their choice. If that choice is to rent, so be it, they can drop it on a GT.

As for landlords selling, another valid point, but nothing to worry about.
In fact, many moons ago, before we had our first child we rented in a country town.
As the market was flat at the time, many of the listings for sale were rented in the mean time.
It became a town joke that if you wanted to shift your house, rent it to us.
Every place we moved into over a 2 yr period sold soon after we moved in and made them 'liveable' to our standards.

The biggest problem with moving regularly was wardrobes, ya couldnt buy descent wardrobes unless you forked out ridiculous amounts and so you got stuck with chipboard which fall apart in the old caged 6'x4'.
Lost count of how many wardrobes we went through...lol

[neptune blue]

I believe that renting is better than buying for something like the first 10 years
After 10 years your equity and capital gain starts out stripping the advantages of renting

I think that the most attractive thing about owning your own home ( owning as in no mortgage ) is that no one can kick you out or take it away from you

They can cut off the gas, water & electricity but they can't kick you out of your house

I owned my last home & I can't tell you how good it feels - no more pressure , your outlook on life changes completely, the bank balance takes care of its self and there is always money available to buy stuff

Even If you loose your job you can still survive on the dole !

[MercurySilver]

So you're ten years behind from the get go,....

[neptune blue]

I don't think you are behind - it takes 10 years before you gain
reasonable equity
That is supposed to be an average
For the first 7-10 years you don't make a big dint in the mortgage as you are mostly paying interest
After this ime more of the principle comes off
Also it's assumed based again on an average that you will get some sort of capital gain

I had this discussion with my brother some years ago
He was struggling to make mortgage payments in his unit and wanted to sell only after 2 years
He got a valuation and he was at break even

I told him not to sell under any circumstances and to reduce his repayments to interest only
He did this for another 4 years then sold the place and walked away with $130k

Property is a long term investment

[Franco Cozzo]

I don't know if I want to spend $350K on a house, I like the idea of a tow vehicle and a 5th wheel caravan and maybe a property to be a "base", stay there between moves and live in the van.

These days you got all the luxuries in a caravan, A/C, etc.

Ability just to move everything if you want to look for work in another state etc.

[neptune blue]

You don't have to buy a house
You can always buy land

Realistically you have to think ahead. While you can generate an income it's easy to think that you don't need security

I think one of the problems with property is that it makes you asset rich but cash poor
But it is an appreciating asset

My parents built a 14 square brick veneer house in 1972 and it cost $20k
It sold in 2005 for just over half a million

Ok the argument is that those were different times

So in 2005 I purchased the block that we eventually built on
It cost $276k including the stamp duty , same size blocks in the same area are getting $500k + now

So it's all relative

If you buy today for $350k in 10 years it will be with more , that's pretty much a given
If you don't buy you may need to find $400k to buy the same property

Unfortunayly its becomming a scenario that the longer you wait the harder it is to buy into the market

So if you bought today at $350k in 10 years you would most probably walk away with a capital gain of some sort

The question you need to ask your self is if the propety is worth $50k more in 10 years ( to use an example) could you save that amount of money over the same period ?

[BENT_8]

Originally Posted by neptune blue

The question you need to ask your self is if the propety is worth $50k more in 10 years ( to use an example) could you save that amount of money over the same period ?

The answer is yes, about 2 times over.

Using my scenario above the difference between renting and paying a mortgage on the same property is about $200pw.
If I rent for the next 10yrs at $290pw, bank the $200pw I will have $100k plus interest.
If the property I wanted was to rise $50k I would be $50k+ better off.
The only difference would be the date the mortgage was finally paid off.
Either 2044 or 2054 over 30yrs.

The question is what if the property was worth equal...or heavens forbid less.

[gtfpv]

i'm almost thinking of selling and then renting . imagine equity of around 700k , being deposited in the bank . .
then your house isnt depreciating . your interest is covering your rent , and your mortgage payments are now savings . before long i would have a million in cash + super without depreiciation , renovation , or worries about such a huge investement getting older .
i most likely wont do this but it is a thought that passes my mind . eventually over inflated prices and mortgages surely become less attractive than cash and interest paid to me rather than the banks .

thats akin . to your living rent free , and all you earn is yours . no mortgage , and retire with a nest egg and no risk .

a friend of mine a few years older than me . who bought renovated and sold houses whilst living in them over a period of 20 years and hard work borrowing and renovating and selling for profit about 6 times over 20 years . made 1million dollars and sold the last home for such . he did deposit the 1 mill , he is 48 earns a good salary , his wife works , and he now lives inan apartment with his wife and 2 daughters in cronulla . he says his rent is covered . he always has a mill in the bank , and has all his earnings to spend on whatever , cars and holidays , and no worries at all .

[Yellow_Festiva]

Originally Posted by neptune blue

Unfortunayly its becomming a scenario that the longer you wait the harder it is to buy into the market

I think this is the main argument as to why the best time to get into the market is as soon as you can.

The trend over the last several decades is that the gap between average income and average cost of a property is getting wider and wider.

Sure there have been minor blimps to the above trend every now and again, but I personally think this past trend will maintain.

I don't believe in any doom and gloom / global crisis / world recession etc. If you do, that's great. Keep all your links and arguments to yourself.

With a whole bunch of 3rd world countries 'moving up in the world' (pun intended) what we have is desirable to people who have the money to buy in. And it is already happening.

I think, the smartest move anyone can make is save up a deposit (enough to satisfy the banks computers), buy a place that they can see themselves living in for a while and try to get their repayments at near enough to their weekly rent had they been renting.

I got a mate who is renting a 2 bedder unit in the inner city frings for $650pw... 650!!! That is a lot of money! Heaps....

Some quick sums and he could have very easly managed a 500k loan paying that rent. $500k is not an amount to be sneezed at.... especially if their needs is a 2br unit with a car space.

Each to their own I guess.....

[BENT_8]

Originally Posted by gtfpv

i'm almost thinking of selling and then renting . imagine equity of around 700k , being deposited in the bank . .
then your house isnt depreciating . your interest is covering your rent , and your mortgage payments are now savings . before long i would have a million in cash + super without depreiciation , renovation , or worries about such a huge investement getting older .
i most likely wont do this but it is a thought that passes my mind . eventually over inflated prices and mortgages surely become less attractive than cash and interest paid to me rather than the banks .

thats akin . to your living rent free , and all you earn is yours . no mortgage , and retire with a nest egg and no risk .

Your not alone, I know a number of people who have done just that.
When we sold at the end of 05 my inlaws thought we were crazy.
At the time they owned their own take away business and worked 14hr days, 7 days a week.
There was no time to appreciate what they had, it was nothing more than a bedroom and shower.
3 years later they sold the shop and followed suit.

6 years later and they wouldn't look back.
They finish work at the end of the week, hook up the van or load the car if coming to our place and off they go.
No upkeep, repairs etc. and the money in the bank contributes to their rent, which in the country town they live in, is only $150pw for a beautiful 4 bedder with family room and 4 car shed in the town square.

[gtfpv]

Originally Posted by BENT_8

Your not alone, I know a number of people who have done just that.
When we sold at the end of 05 my inlaws thought we were crazy.
At the time they owned their own take away business and worked 14hr days, 7 days a week.
There was no time to appreciate what they had, it was nothing more than a bedroom and shower.
3 years later they sold the shop and followed suit.

6 years later and they wouldn't look back.
They finish work at the end of the week, hook up the van or load the car if coming to our place and off they go.
No upkeep, repairs etc. and the money in the bank contributes to their rent, which in the country town they live in, is only $150pw for a beautiful 4 bedder with family room and 4 car shed in the town square.

this i believe is what will push the market to crash too . so the ones who do this are likely in a safer boat than those who dont . as inflated house prices sore compared to incomes . it becomes better off not owning , believe me every year i do the sums over what i'm paying versus house growth . soon the bucket will tip in favour of selling .
and i'm west of Sydney . there are plenty of suburbs within 30km of Sydney where the average price of homes is over a mill , in fact many with 1.5mill homes . even a 500k loan with a1.3k house is looking like a good prospect to get out of that hefty strangling 500k mortgage . and there are heaps and heaps and heaps out there . i'm sure interest rate rises r just house price rises will tip the market into losses very shortly .
out here in the west though , we have less to gain and will have less to lose . but really this is what would go through everyone's minds . as out here in the west the houses are cheaper and the mortgages are smaller . the equity is close to par , well not really , but why would people inside 15kms of sydney keep struggling with big mortgages and heaps of equity . ?

[buggerlugs]

Originally Posted by gtfpv

i'm almost thinking of selling and then renting . imagine equity of around 700k , being deposited in the bank . .
then your house isnt depreciating . your interest is covering your rent , and your mortgage payments are now savings . before long i would have a million in cash + super without depreiciation , renovation , or worries about such a huge investement getting older .
i most likely wont do this but it is a thought that passes my mind . eventually over inflated prices and mortgages surely become less attractive than cash and interest paid to me rather than the banks .

thats akin . to your living rent free , and all you earn is yours . no mortgage , and retire with a nest egg and no risk .

a friend of mine a few years older than me . who bought renovated and sold houses whilst living in them over a period of 20 years and hard work borrowing and renovating and selling for profit about 6 times over 20 years . made 1million dollars and sold the last home for such . he did deposit the 1 mill , he is 48 earns a good salary , his wife works , and he now lives inan apartment with his wife and 2 daughters in cronulla . he says his rent is covered . he always has a mill in the bank , and has all his earnings to spend on whatever , cars and holidays , and no worries at all .

Have you checked the rate banks are offering on deposits at the moment ?

[nuthin' fancy]

Originally Posted by buggerlugs

Have you checked the rate banks are offering on deposits at the moment ?

And have you seen the tax paid dividends their shares produce!


Property is not the only investment you can make. If you rent and invest surplus funds, you may well be better off than if you bought at the start. If you rent and make no investment, you will be worse off, even if property doesn't appreciate beyond inflation.

[neptune blue]

Originally Posted by gtfpv

i'm almost thinking of selling and then renting . imagine equity of around 700k , being deposited in the bank . .
then your house isnt depreciating . your interest is covering your rent , and your mortgage payments are now savings . before long i would have a million in cash + super without depreiciation , renovation , or worries about such a huge investement getting older .
i most likely wont do this but it is a thought that passes my mind . eventually over inflated prices and mortgages surely become less attractive than cash and interest paid to me rather than the banks .

thats akin . to your living rent free , and all you earn is yours . no mortgage , and retire with a nest egg and no risk .

a friend of mine a few years older than me . who bought renovated and sold houses whilst living in them over a period of 20 years and hard work borrowing and renovating and selling for profit about 6 times over 20 years . made 1million dollars and sold the last home for such . he did deposit the 1 mill , he is 48 earns a good salary , his wife works , and he now lives inan apartment with his wife and 2 daughters in cronulla . he says his rent is covered . he always has a mill in the bank , and has all his earnings to spend on whatever , cars and holidays , and no worries at all .

cash is good but it doesn't keep pace with inflation - what you can buy for a dollar now will cost more in 10 years time so it wont stretch as far

if you look at all the historical data property is one of the things that does keep pace with inflation

[neptune blue]

Originally Posted by BENT_8

The answer is yes, about 2 times over.

Using my scenario above the difference between renting and paying a mortgage on the same property is about $200pw.
If I rent for the next 10yrs at $290pw, bank the $200pw I will have $100k plus interest.
If the property I wanted was to rise $50k I would be $50k+ better off.
The only difference would be the date the mortgage was finally paid off.
Either 2044 or 2054 over 30yrs.

The question is what if the property was worth equal...or heavens forbid less.

look at all the data and you will see that property is one of the only things that keeps pace with inflation
even if there is a down turn there is always a recovery
at the end of the day nothing in life is certain & sitting on the fence waiting and wondering is the worst thing anyone can do

at the end of the day you have to do what you think is right for you
property has always returned big dividends for me

If I had invested in property back in 1994 instead of super I would be on easy street right now

after 20 years of super contributions I only have 200K to show for it

that's why I'm taking it out of super and managing my own fund by purchasing another house , which I will own thanks to my 9% employer contribution and the tenant in about 15 years time. It will probably be worth around 700K by then
sell the one that I'm in for $1.3-$1.5 Million and chill

[usernametaken]

A lot of posts here assume that property will only go up.

NOTHING ever always goes up.

[ZA-289]

Long term is does.

If you never HAVE to sell at any one point you can ride out the lows and wait for the highs then sell

[Road_Warrior]

Originally Posted by Big Damo

I don't know if I want to spend $350K on a house, I like the idea of a tow vehicle and a 5th wheel caravan and maybe a property to be a "base", stay there between moves and live in the van.

These days you got all the luxuries in a caravan, A/C, etc.

Ability just to move everything if you want to look for work in another state etc.

I'm not sure tipping that much money into depreciating assets like vehicles is a good idea. In 10 years your land will still be worth more-or-less what you paid for it (or more) and the ute/caravan probably half as much as what you paid for it.

Originally Posted by gtfpv

i'm almost thinking of selling and then renting . imagine equity of around 700k , being deposited in the bank . .
then your house isnt depreciating . your interest is covering your rent , and your mortgage payments are now savings . before long i would have a million in cash + super without depreiciation , renovation , or worries about such a huge investement getting older .
i most likely wont do this but it is a thought that passes my mind . eventually over inflated prices and mortgages surely become less attractive than cash and interest paid to me rather than the banks .

thats akin . to your living rent free , and all you earn is yours . no mortgage , and retire with a nest egg and no risk .

What about the tax you will pay on the interest you will earn?

One of the best banking products these days is the offset mortgage account - we have a $400K mortgage with an offset account that is 100% offset against the mortgage. Normally, interest payable on something like that would be huge, but we've shoved $150K in there and the interest calculated monthly is piddling compared to what we'd normally be stung with. So we're saving a fortune on interest, but we don't have to pay any tax on the money in the account because it is offset, and the money is working for us.

[nuthin' fancy]

Originally Posted by usernametaken

A lot of posts here assume that property will only go up.

NOTHING ever always goes up.

So show me an example over a reasonable time frame where a normal property in a normal location hasn't increased in a value ahead of inflation.

Yes, high end investment property on the Gold Coast is subject to greater fluctuation than most.

Investing in a location reliant on mining has its risks.

Buying a normal house on a normal street is generally a reasonable way to invest.

Investing isn't about finding the fringes and stating why it doesn't work, it is about a sensible, managed risk.

Spend less than you earn and invest the rest. If all you do is pay your house off and retire on your super you are a long way ahead of the pack.

[ebxr8240]

It's a real warm feeling the taxman and tenants are paying my rentals .. 4.6 % interst on term deposit is not making money !! I'm 62 soon and self funded retiring to motorhome . Living off the rent and super.. Keep telling the Mrs how are we going to servive ? Lol still have our home to come home to ..

[MercurySilver]

What ever happened to getting a house and smashing the repayments as quick as u can???

Renting is dead money.

[BENT_8]

Originally Posted by MercurySilver

What ever happened to getting a house and smashing the repayments as quick as u can???

Renting is dead money.

What about the ones who redraw or fund depreciating assets with their mortgage, how many will ever actually pay off the principal.

[ebxr8240]

Buying a house has SFA to do with re-draw if they silly enough it wasn't buying the house that sent them broke..
To the OP buying anything then when it appreciates then selling off a part of it is NOT exactly paying it off on poor blokes wages..Very possibly good financial management though.. But its twisting the heading a little..

[Ben73]

Originally Posted by BENT_8

The answer is yes, about 2 times over.

Using my scenario above the difference between renting and paying a mortgage on the same property is about $200pw.
If I rent for the next 10yrs at $290pw, bank the $200pw I will have $100k plus interest.
.

It sounds good. But personally I don't know anyone with a regular job who has $100,000 plus in the bank and is renting. But then again I don't ask every single personal I know about their personal finances.
But I know a few people who rent and have nicer things than me and go on more holidays and all that. Because the majority of people will find ways to spend most of that extra $100,000.
I respect you or anyone who can rent and save over $100,000 without a specific goal.

[ebxr8240]

What I'm trying to get through to the younger guys on here..
I have friends who are in their mid 60's and have NO home .. Spent their money having a good time.. Trouble is I feel sorry for them.. Basically good people..
The dole or pension goes no where near paying rent and payments on their new-sh cars ..

[BENT_8]

Originally Posted by Ben73

It sounds good. But personally I don't know anyone with a regular job who has $100,000 plus in the bank and is renting. But then again I don't ask every single personal I know about their personal finances.
But I know a few people who rent and have nicer things than me and go on more holidays and all that. Because the majority of people will find ways to spend most of that extra $100,000.
I respect you or anyone who can rent and save over $100,000 without a specific goal.

It isn't all saved, we started off with $80k from the sale of property.
In the 8 years since the initial investment we have added another $70k.
We could have added more but took a holiday to the GC, Bought a boat, cars, motorbikes, kayaks. Etc. etc.
Fwiw, the property we sold has not gained $70k in value in the last 8yrs, perhaps $45k if it could be sold in todays market.

We do have a specific goal, to provide our children with a head start via either a home deposit, furniture or money to travel etc.
They wont get it all though, I want my coaster bus at some stage.

[EDManual]

I've been lucky I guess.

Feels funny to be able to now have a block sitting there paid off (on my wage!) and 150 grand in the bank! (I have 2 kids and a wife)

Now I am organising the new house, we will rent for 2 months, then going to France/Europe etc for 3 months for a holiday (Got my Long service leave!), (hmm, Nurburgring is calling me again...) then back for maybe 2 more months and move in to the new one at the end of October.

Will have a mortgage again of about 80G as am spending 230-40ish all up on the new one :-) (30 Square 2 story) and that after landscaping (which I love doing) should be worth $450Gish...

If I was renting all that time, I would have had NOTHING right now. Absolutely NOTHING... because after I pay $1200 or so which I pay now for interest and repayments, after expenses I have nothing much left. If I paid that in rent I also would have nothing left and no asset either.

[blackwasp]

Originally Posted by Ben73

It sounds good. But personally I don't know anyone with a regular job who has $100,000 plus in the bank and is renting. But then again I don't ask every single personal I know about their personal finances.
But I know a few people who rent and have nicer things than me and go on more holidays and all that. Because the majority of people will find ways to spend most of that extra $100,000.
I respect you or anyone who can rent and save over $100,000 without a specific goal.

ok i have to respond now! i have 145k in the bank, renting 350/w. not sure what to do. i hear/read about the impending bust in the housing market.
1. should i buy a home to live in where i'm living now 50km from work , don't mind it but could easily afford 350k mortgage
2 should i buy where i really want to live , 8km from work , near the beach but with a hefty 500k mortgage
3. should i buy an investment property where the rent pays for the mortgage
4 just continue to rent where i am 50km from work and save more money?

live in sydney with wife(not working) and 1 kid
cheers
confused