Does Renting Make Sense?

[Glen]

Does Renting Make Sense?

http://www.getrichslowly.org/blog/

[Tan]

We all know we would be richer on a day to day basis renting.

If I just rented, would I save/invest the difference so that I could afford to rent in my old age, or would my standard of living rise to absorb the excess? I would wish the former, but have to admit the latter.

My parents and their parents owned their own place, I have no example to follow of how to live in a rented house. How is it done?

I know that each year my mortgage goes down. Each year my tenants rent goes up.

I have noticed that some things are difficult to prove by logic or 'doing the figures'. Home ownership is sometimes one of those. I bet the people who write these articles own their own home & aren't selling based on their findings.

[Keithw]

totally agree.
There is definitely a financial cost to home ownership, but most are happy to pay that because they see it as their savings vehicle for later life.
This is why the Govt will need to be very careful with tax changes because if it kills the return relied on by retirees, suddenly there will be a huge demand for Govt financial assistance from the middle-aged / elderly who do not have a long savings history in things like kiwisaver, or have lost the lot in "Managed Shares".

The logic of housing involves much more than just the cost of it,or the demand for it, it includes the feeling of control, the security, the forced savings & many emotional aspects and social aspects that "Economists" seem to regularly ignore. (as evidenced by Bernard H -the economic journalist admitting that he had underestimated how stubborn homeowers were about holding out for prices they wanted, which had meant the prices didn't drop the fabled 30% - of course when challenged to sell up his own place so he could buy it back again for less in 2 years time, he would not have a bar of "the Risk")

[bangkok_offices]

Renting makes sense when a person can't afford to buy his own house. Others see renting a way to save money rather than owning, but if you look at it, owning is the cheapest way to get your own property permanently.

_________________
bangkok leased office | bangkok office for rent

[Tan]

The other thing to think about is retirement.

I know several people who have retired and through my observations, though most are quite broke, those trying to pay rent are really struggling. Not to say that paying rates etc is easy for the rest, but the pension for 1 person is $339 per week and rent for a smallish half decent place here is $240. $100 for power, vehicle, food, doctor etc is just not possible.

Make sure you look after your partner well and keep them alive as long as possible . A bit of a double whammy after a funeral to have your income drop by $213 per week ($522 is the couple rate) as happened to one friend of mine recently.

Look at these examples - all mortgage free as I guess they couldn't find any happy renters!

http://www.sorted.org.nz/retirement?_$ja=kw:nz+superannuation|cgn:Broad|cgid:2144057641|tsid:9935|cn:Super|cid:59461681|lid:133059992|mt:Broad|nw:search|crid:9694065001|bku:1&gclid=CKHI0qOvxakCFYIkpAodfQzriw

[One]

Can you get an accommodation allowance if you're on Super and renting?

Not that I think it makes that much difference if you do. I'd hate to have to live on just Super even with a mortgage-free house!

[eri]

to me renting made more sense

while i was moving

once i had stopped moving

buying made more sense

esp. as by then i had saved enough to skip a morgage

in a stable economy it's probably better for the country to have a very high proportion of workers who own their own homes

but when the economy is custard

it's probably better to have a highly mobile workforce who aren't tied down by real estate

chch, tokoroa etc. become HUGE weights on the social welfare net when people find it easier to go on welfare and demand the gov. bring jobs to them, rather than just give notice and move to where the work is

we need a mix of renters and home owners

and the balance is always being "tuned"

by events and the economy

manurewa to the manawhatu and start making milk

[myplace_11]

Yes it does make sense, you have a place to leave but the thing is you have to pay every month.

[notch]

If house prices flat-line for the next 5 years or so (which is quite likely), is it really still worth buying?
The only advantage I can see is inflation eating away the mortgage debt.
BUT, inflation is not inflating peoples earnings at present - just their expenses.
Do you know anyone with a 4+% pay increase in the last few years?
So how can the debt be inflated away if inflation is only happening on the expense side?
Seems to me that there is very little financial benefit in owning at present.

In my situation, I rent an $750k house for the cost of a $250k mortgage (in rent).
Either I triple my outgoings to have a place to call "home" (actually a place the bank owns) and buy, or
I save the difference. It's a no-brainer!

[Tan]

Either I triple my outgoings to have a place to call "home" (actually a place the bank owns) and buy, or I save the difference. It's a no-brainer!

Most people wouldn't save, despite best intentions.

[essence]

Like all situations, renting and/or owning a house, have their times.

If you're moving around a lot because of your job, you're young and can't "settle" somewhere, you don't have the nous or capability of being a home owner, then renting is ideal for you.

If you've stopped moving around, you've got the partying out of your system (hopefully!) and you've learned a bit of life, you've picked up some DIY skills, then perhaps home ownership is for you.

There are some people who never want to rent and there are some people who never want to own their own home and the responsibility that goes with it.

Each situation/opportunity is no worse and no better than the other.

That is why there will always been Landlords and tenants.

[cube]

If house prices flat-line for the next 5 years or so (which is quite likely), is it really still worth buying?
The only advantage I can see is inflation eating away the mortgage debt.
BUT, inflation is not inflating peoples earnings at present - just their expenses.
Do you know anyone with a 4+% pay increase in the last few years?
So how can the debt be inflated away if inflation is only happening on the expense side?
Seems to me that there is very little financial benefit in owning at present.

In my situation, I rent an $750k house for the cost of a $250k mortgage (in rent).
Either I triple my outgoings to have a place to call "home" (actually a place the bank owns) and buy, or
I save the difference. It's a no-brainer!

All well and good so long as you don't mind being given 6 weeks notice to move at any time, and that you do actually save the difference.

And well done for renting a $750K house for $288 (6% on $250K) a week - don't forget that any capital payments are really the equivalent of saving.

[cube]

... and another thing.

The bank does not 'own' the house - you do. The bank has a financial interest, but that is very different to being your landlord (they can't, for example give you 3 months notice just because they feel like it).

[mattinvestor]

rent does make sense if you don't have money to buy a house yet, but during that time you are renting you should also be saving as much as you can so that later down the track you can buy a house. Renting pays the landlord but leaves you with no asset in the end

[jimO]

i have never rented, bought my first house at 19 cant see the point of paying some greedy landlords mortgage for him