Rent vs Buy a home

Good to see you are thinking and are definitely on the right track. What you have to do now is a bit of research on house price movements and then speculate.

If you decide the prices will go up in comparison to your alternative investment then you would buy.
If you decide the prices will go side ways in and your other investment will go up, then you wouldn’t buy.
If you decide the prices will go down then you wouldn’t buy.

Check out MattNZ, Unmester and to a lesser extent my on posts for reasons on not to buy.
Check out ALF1 and basically the rest of the forum for reasons to buy.

Have fun speculating let us know what you decide.

There are a lot of benefits for both renting and buying, also a lot of disadvantages, many of them are not always financial. Things like in your own home you can just about whatever you please regarding decorating and internal design, but with renting you have the flexibility to change where you are living relatively easily. And as the rent is generally lower than mortgage repayments, you can find yourself living in a much more expensive place you may be able to afford.

As for financial reasons, I made a spreadsheet when I was first looking at buying a house to see if it was better for me to continue to rent and save more money to create a larger deposit, or if it was better to get in now with the deposit I had and start investing in a property right away. I can send you the spreadsheet if you want, feel free to drop an email and you can have a look at it and make up your own mind. In the end I chose to buy a place, I think it was actually even for me from a financial point of view, but there were other reasons which made me want to buy a place.

I have a preference of owning over renting. With owning – there’s the non-financial benefits of stability and freedom (you don’t need to worry about the landlord selling up or moving in and you can decorate the place however you please).

Also, as touched on above – it’s an asset that doesn’t trigger CGT once sold. It should also (hopefully) go up in value during the time you’ve owned it (whilst your landlord will be the one benefiting from any capital gains associated with the house you’re renting).

Cheers

Jamie

Hi Joel

That’s the great thing about the forum – you’ll often receive a range of responses from those with varying opinions and experiences. At the end of the day though – the decision is yours.

Best of luck with whichever you choose.

Cheers

Jamie

I'm a bit late, but I agree with Jamie. There are a lot of non-financial reasons to own, and the peace of mind that ownership brings is priceless to me.

The other thing I hear a lot is, 'I'll rent and invest the difference'. I'm not sure how many people ACTUALLY do this, but you need to have the discipline to put away the extra funds into another investment.

If I had kids and was looking to provide them some stability I would be looking for a house to buy close to good schools and public transport.

But at the moment I am under30 and looking to travel via working and volunteering as much as possible, and will continue to do this while I can still get temporary work visas with ease. That’s why I like investments that don’t require constant servicing plus my tax isn’t too suffocating.

I invest most of the difference of renting and a mortgage, not all because whilst I value investing and hard work, I also value my youth and for the time being am enjoying the life of Dorian Gray.

Well I'm a bit of a novice myself, having only bought my own home (and no current investment properties).

I bought my home pre-Steve McKnight books and properly educating myself.

Whilst I have no regrets in buying my own home (yes, there is an emotional sentiment, and it's about making a house a home), something I would do differently is perhaps bought a house that was not as "nice and perfect" (freshly painted walls, downlight, newly rennovated kitchen etc.) and therefore it would've been cheaper for me to own my own home and I could've had more money earlier for investing.
Also I would've bought my first home with a view towards it being a future investment property.

The home I have bought we paid an extra premium for b/c it has a lot of land and the area is a "family" area……
but had I had more of an investment orientated focus…..I would've bought a place to live in but also with a view towards renting it out in the future as I progress on.

Hope this makes sense Joel.

Consider your budget, the area which you are purchasing (can you live there for 3  to 5 years). Is your job stable?

Nice information. Potential buyers bought into all sorts of rent vs. buy myths to justify buying houses that they could not afford during the boom. Now that the U.S. housing market is in shambles, people are starting to realize that renting may not be a dirty word after all. Contrary to popular belief, buyers do not get back the mortgage interest they paid throughout the year at tax time. I think that the recent preoccupation with sub 30s to buy a house is due to the bubble and ear bashing of PI parents. In the end I chose to buy a place, I think it was actually even for me from a financial point of view, but there were other reasons which made me want to buy a place. Thanks for sharing..

AGe old question. I didn't buy my first property until quite recently. I travelled a bit, and enjoyed it.
Really it is what your circumstances are at the moment. I always admired some youngish early 20s person that had their own property, but later realised a lot of the times it was mum and dad looking for a way to invest and make the most of the 1st home owners grant, hence they would lend the deposit to their son/ daughter and use that to buy the property. Nothing wrong with that, but some of us weren't quite as fortunate.
Anyway, 100k in savings is a good sum, and good on ya. gotta remember that a 300k loan is over 2k a month, so will this affect your current lifestyle? If so, dont rush in.