Hi FYI,
Wondering how many investors are currently living in a property they own all or part of?
Cheers.
Hi Don and Liz,
I couldn’t make much out of the web you posted but will try again. I currently rent cheaply and although it has it’s disadvantages in some ways, in the bigger picture the means justifies the (investing) ends.
Cheers,
Gatsby.I need to register to read the article. I’m a long-time renter. I was always curious which way to go: should I rent and invest in property (cf+) or should I buy to own (a property) and then invest ?
Hmm… I’m hoping to be in a better position in 6 months time so that I can move out of the rental property I’m in now into something smaller and less expensive. I’m hoping to have a car by then so that will allow me to look outside of where I currently live for affordable rental properties.
Wishing everyone radiant health!
Vanessa
4 out of 5 Taste Buds Surveyed Preferred > http://url123.com/wa2ev
For Australians Only > http://got.to/liveafunlifeHi GoldCoastGirl,
I’ve always rented from being a student until today. I spent a considerable amount of time backpacking o/s and when I came back to OZ in 97 I found choosing to rent back here, cheap by comparison to surviving on a backpacker’s budget (and admittedly the sacrifices that came with it!). After travelling o/s, I realized that renting cheaply by lowering my means far out weighed the costs that would have set me back in property investing if I had chosen to buy my own home. I guess it’s a personal choice when it comes down to it, but if purchasing IP’s is one’s main goal, then the savings you can make by renting (no rates, maintenance, long term PPOR loan, etc) will pay off in the long run if you can manage to delay immediate gratification for long term gain. One thing I said on this forum once (and I think it was a post about ‘talking to friends about IP’s?) and I was refering to friends of mine was this. “People borrow money they don’t have, to buy things they don’t need, to impress people they don’t even like!”
Cheers,
Gatsby.So basically, since I’m okay with the whole delay-ed gratification concept. It would be better for me to rent a modest place whilst I invest… so that I can then eventually move out into “my own home” securely due to having the IPs behind me (as such).
I would be investing in property for income as well as assets. I realise it is starting to become harder to invest in property for income these-days (market climate as such)… so I’m quite happy to sit back.. rent cheaply.. save my money.. and then invest.
Wishing everyone radiant health!
Vanessa
4 out of 5 Taste Buds Surveyed Preferred > http://url123.com/wa2ev
For Australians Only > http://got.to/liveafunlifeWe own our PPOR outright and have it fully hocked to buy IP’s.
We consider this to be the equivalent of having your cake and eating it too.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
For myself (and I definitely wouldn’t call myself ‘sophisticated’ in investing!) I know that if I had put my first deposit that I managed to save into a PPOR I wouldn’t be in a postion to have invested in IP’s and continue to invest. The question for myself (and perhaps others in similar circumstances) was my lifestyle. To gain the deposit from starting from scratch with huge debt, I virtually worked so much that I didn’t have time looking back to spend it on lifestyle expenditure. I would always ask myself, ‘Do I WANT IT or do I NEED it?’ Being such a subjective question I was prepared to fore go consumer/lifestyle expenses that other of my peers were lashing out on. Also at the time of saving, it was having a double wammy effect. Instead of going out ‘on the town’ and blowing $x amount of dollars (which I have done to death before), I was actually saving this amount by being stuck at work and earning the amount probably equal to what I would have spent as well. I’m not recommending anyone to live a ‘Spartan/Pritiken diet lifestyle’, for myself, I just kept focusing at the time on what I wanted to achieve in the longer term. I realize their are a multitude of sophisticated and more fast tracking ways of to build up a deposit. My work at the time however supplied accomodation so I used this to my advantage and still think if I can rent cheaply and if it’s in line with my goal then ‘for me’ it makes sense. I guess people can only answer the question of such an approach themselves, depending on their own personal circumstances and what they are prepared to sacrifice and what works best (including investing strategies) to achieve that goal.
Cheers,
Gatsby.“Sometimes the hardest thing to do in life is often the best thing to do.”
5 years ago, I start investing in property. I believe renting was the best way to go because no kids. Now I am still renting, but with 2 kids. I feel that I need a proper PPOR where I can let my kids running around in the backyard. Now I am still hoping and looking for PPOR which mean I have to sell a couple of my investmen properties. Considering the cost of selling and so for, I now realised that starting with PPOR would be the best. But again if you start with PPOR then I would not have any money available for investing in property. So the question is am I doing the right thing?
Kind Regards
JetDollars
“The road of some-day lead to the town of nowhere”Hi jet
i bought my PPOR when i was 21 and was pretty much mortgaged to the hilt i suppose…i was pretty green knowledge wise and just saved and bought a house as thats what most of my mates were doing….now we r moving and are going to rent the place out whilst renting a much cheaper place at other side of town. I couldnt really believe how beneficial it can be to live in a rented place at much cheaper rent and own IP’s on the side….if i had my time again i would have bought an IP when i was 21 and probably not worried too much about PPOR for a couple of years….
cheers
Coops
We rent at the moment as we recently renovated and sold our first PPOR. We then moved to a different area and decided it was easier to rent while we got settled and found land to build on etc… There is no way we will stay renting any longer then we have to as I dont see the point in paying a lot of money every week for a place which is never going to be the way you want it. Ours is small and for the owners definately a CF+ investment, I dont see the point in paying off someone elses home when you could be in your own for the same or only a little bit extra dollars. Plus we want to be able to use the equity in our own place to purchase IP’s.
I am with Dazzling. I have my own home & all equity is being used for investing. I had contemplated selling & unleashing the cash but I have two dogs & who wants to rent to someone with two big german shepherds. Besides how much more cash can I get by doing this 20%? Big deal, then I have to pay someone elses house off not to mention the constant possibility of being told I have to move out. No thanks
I’m renting a gorgeous property & love people who believe in –ve gearing. The owner paid over $550k & is subsidizing my rent with his pay packet as it is only $350 p/w AND I get a tax deduction on that as I have a home office.
If I had owned the property, my mortgage payment would’ve been more than the rent and would not have been tax deductible. In terms of opportunity cost, money that would’ve otherwise have gone into the property would not have given me anywhere near the return that my investments had.
When I sold my first PPOR after 4 years, very little had come off my principal. I might as well had been paying rent, as interest home mortgage was still dead money. For me the difference between paying rent & mortgage is that with rent, I get to invest my capital, gear it & enjoy tax deductible interest payments and associated expenses. Income streams from my investments can then pay for my PPOR, if I ever feel the urge to own one.
Starglow
How do you know the owner of the house you are renting is subsidising your rent with his pay packet? He may have had a big deposit towards the $550K purchase price. He may also welcome the tax break from the negative gearing.
It is unfortunate that in four years you didn’t make anything when you owned your PPOR but that is just a matter of timing. In a different four year period, you could well have doubled your money.
We’ve been negatively geared (happily) to a greater or lesser extent for many years. It has helped us build up wealth. I know many on this forum thing gearing is not the best way, but it has been a good savings vehicle for us.
I know advisers suggest people could rent and invest the money they would have put into a (higher) mortgage, but I suspect many wouldn’t be disciplined enough to do this. I know we would probably find lots of things we “need”.
Anyway, we are all different, with different needs and goals, but, personally, I’d hate to pay rent.
Regards, Wylie
I have my own home and equity is used purchase investment properties. In last two years I had 200K gain on it and it will CG tax free, if I decide to sell. Your private residence is not taking into account in asset test for pension or social security entitlement. I think it is great way how to accumulate wealth.
I have my own home and use the equity to invest as well. With kids I prefer it this way, even though our investing will take longer than if we rented and investing. IT’s a lifestyle choice we made.
Jetdollars, rather than sell a couple of IP’s, can you not move into one of them?
Regards
PKCoops,
I still agreed with you that, starting in property investing it’s best to rent while invest. But at the end of the day, we need PPOR where we comfortable with.
That’s how I felt right now. I am renting but alway looking for opportunity to build my PPOR ASAP.
Purplekiss,
One of my IPs have a 5 years fixed and interest only. It’s expire in september this year. I already renovated the place. So in september I am going to move in and at the same time looking for a block of land to build. I actually like the area but don’t like to shape of the land, so I have to look for another block. If I can’t find the right one then I have to knock it down and build.
Kind Regards
JetDollars
“The road of some-day lead to the town of nowhere”I started with buying my own PPOR. We were renting and saved a very small deposit and then bought our PPOR. As I grew some equity I bought my first investment property without the need for a deposit. We cross collaterised. Now my PPOR is fully paid and I have a few investment properties that were negative geared but are paying for themselves nicely. Our PPOR is now unencumbered waiting for future opportunities.
If I was to start again today – what would I do? I would probably buy a PPOR. Its too hard to save a deposit and rent and then do the above again. By buying a PPOR you are buying in todays dollars and will pay it off in tomorrows dollars. Eg. For a home in my area 5 yrs ago you paid $180k now its $350k. I would buy now and commit in todays dollars, otherwise buying a PPOR in the future will always cost more. Oh and its capital gains tax free.
You can always do what Jet$ is doing and later convert an IP into a PPOR..buying an IP in an area you want to move into would be a good tactic…
We’ve just gone the other way and converted a PPOR into another IP , restructured the loans paid out an IP in full (to then borrow against an unsecured property)and we’ll move onto the next project..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorI think that the logic of renting and having an IP is really dependent upon circumstances. In my case I’d say no, since my PPOR would cost me about half of what I pay in mortgage to rent something similar. However, if I retained my current PPOR and used it as a rental, I’d only get about half as much in rent as the mortgage is costing me, so there is no net gain. Yes I can get something back by negative gearing, but I have not factored in CGT on the rental.
I’d like to do the figures to see how it worked out over a 20-year period, but on the face of it the only way it would make sense is if I compromised on my PPOR and rented something that was of a lower standard/size to my current home.
Wishing everyone radiant health!
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